A) The Shanghai story on global status via newly established free trade zone
had a blank link. Here it is (CLICK
HERE).
B) The
big banks have switched from massive
net short to moderate net long
in gold futures contracts. Jackass
had it backwards in an obvious error.
Not net long, error of total opposite.
C) Giant Russian energy firm Rosneft
signed a US$270 billion supply deal
with China National Petroleum Corp,
which is not known as Sinopec. Apologies,
mea culpa, but so much information!

EDITOR ALERT: Word came yesterday (August 17th) from
a Central Europe bank source that
Deutsche Bank is the object of a massive
new investigation on money laundering.
The lead is taken by the Financial
Action Task Force (FATF). It is curtains for D-Bank, already under severe scrutiny
for accounting fraud and grotesque
lack of capitalization. By year end,
numerous walls will cave in for the
giant bank. The contagion will be
horrendous and very dangerous for
big Western banks.

MONEY QUOTES

"The
surveillance state seems incapable
of grasping that they might not win
this fight, and if they do not make
an effort to get on this bus, they
really could wind up under it." ~ Naked Capitalism

"Tolerance
is the last virtue of a dying society" ~ Aristotle. "The best argument against democracy is a five minute
conversation with the average voter"
~ Winston Churchill. "In times
of universal deceit, telling the truth
will be a revolutionary act"
~ George Orwell. "The government
will make use of these powers only
insofar as they are essential for
carrying out vitally necessary measures"
~ Adolf Hitler.

"By
signing this Federal Reserve Act,
I have just destroyed my own country
by putting too much power into the
hands of a few men." ~ President Woodrow Wilson (1913)

"The
race for the Fed Throne as chairman
is all bullshxx and a clown show,
more like totally irrelevant Kabuki
theater. The next one needs to be
and will be a bankruptcy trustee.
Of the over $3 trillion on the Fed
balance sheet, perhaps close to half
is worthless, since the esteemed central
bank did such a good job of serving
as buyer of last resort for toxic
bonds of all stripes. Any responsible
idiot can do the job of trustee. The
central bank needs to return to its
original function, to count money
and to act as a utility firm that
keeps the lights on." ~ The Voice

"The
Fed's days are really numbered. All
of this is going to going forward
very quickly. We are also going to
have to think about how are we going
to be retiring these banks. We have
to find ways to smooth the transition." ~ Karen Hudes (formerly of the World Bank, who expects some key state banks
to arise with asset-based currencies,
which will swiftly put an end to the
current fiat currency in the United
States, while the USDept Treasury
will start issuing USDollars instead
of the Federal Reserve)

"These
fines hit the bottom line to be sure,
but if I had to do it all over again,
I would not change a thing. It [the
criminal deeds punished by heavy fines]
was worth it." ~ Jamie Dimon (after JPMorgan was
hit with a $410 million fine for rigging
the energy market, just a cost of
doing business, whose criminal settlement
payments plus fines and penalties
all tolled have come to $7 billion
in the last two years, as crime is
a mere cost of doing business)

## INTRO MONETARY FRAGMENTS

◄$$$ THE TNX RUNUP ANTICIPATED AS THE LONDON WHALE
HAS TURNED INTO A LONDON
SNITCH. HE HAS REVEALED SCATTERED
JPMORGUEN ACTIVITY IN THE USTBOND
MARKET, MOSTLY FROM HIDDEN OPERATIONS.
BROAD DEBATE HAS COME CONCERNING THE
USTREASURY BOND MARKET, INCLUDING
WITHIN THE JACKASS OWN CAMP. MY FORECAST
IS FOR A SMALL RUNUP IN BOND YIELDS
PAST THE 3.0% MARK, WHICH WILL BE
CONTAINED BY THE POWERFUL LEVERS.
$$$

Foreign selling will combine with some degree of lost control of the leveraged
tools. The US Treasury Bond bubble
recognition has begun on a global
scale. The Paradigm Shift in China has been at work for
ten years, with the urbanization movement,
the industrial trend, and the usage
of USTBonds to finance their national
development and supply chain, from
metals to food.

Bruno Iksil might provide some damaging data about the cabal. The London Whale
Iksil has unofficially become the
London Snitch. As preface, consider
that Fabrice Tourre of Goldman Sachs
has been prosecuted as a scapegoat,
but hides in France under protection, under benefit of short
reach extradition laws. That the London
Whale has been permitted to walk free
from the JPMorguen proprietary desk
disasters is indication of his new
role as whistle blower, sure to provide
juicy details in the months to come
about the JPM devious devices put
to use from the 2003 to 2007 period.
Curiously, both Tourre and Iksil are
French citizens. See the Zero Hedge
article (CLICK HERE).
What follows is a debate within my
own inner circle of sources and analysts.
Quotes will not be used much, but
the concepts and thoughts will be
identified for their sources.

The Jackass does not expect too many important big stories
to emerge from the London
Snitch in revelations. Many people
do, thinking othersise. Iksil does
not wish to be murdered. One cannot name two stories in recent months from the London Whale, turned
Snitch. Not much in the way of big
revelations at all, perhaps in highly
notable absence even. Not the JPMorguen
vaults going dry, as that data is
public. Maybe he helped to reveal
the JPM hogging of deliveries in June
and July for Gold & Silver futures
contracts, not permitting standard
G&S delivery to clients with standing
contracts. We need some big stories
from Iksil, with ripe potential for
their arrival, but nothing seems to
come from him despite his new name
(misnomer). The Voice made a direct
comment, saying "Nothing will
happen on the news front. It is all
a mega charade. But as for the USTBond
market and its supporting mechanisms,
it will be like pricking a balloon.
One big bang and all will be gone."
Uh-oh! The biggest asset bubble in
modern history is at risk, and wealth
evaporation on the paper tables could
be astonishing.

The Jackass forecast is for a move above 3.0% on the
TNX, the 10-year USTreasury Bond yield.
Its powerful control device has had
to withstand high winds as the TNX
has risen from 1.7% in early May to
2.8% in August. It will not break totally, but it is at great risk from the Interest Rate Swap,
the derivative buttress in support.
Normally a 30 basis point (0.30%)
move would de-stabilize the IRSwap.
Also, the bond market has begun to
see the flood of USTBonds returned
to sender, sold on the side corridors.
Part of the channel is stuffed with
Indirect Exchange, the return to sender
of USTBonds, often through the Chinese
hands. So the Jackass position
is for a move above 3.0% on the TNX
in the coming several weeks. All
hell might break loose, but for reasons
stated by Rob Kirby, control will
be exerted, certain mechanisms turned
on, in order to reduce the TNX. My
guess is Wall Street banks have very
big option calls in place on the TNX,
to profit from the rising bond yields.
They were told of the Taper Talk early,
and did huge frontrunning (because
they could) so as to reduce losses.
The TNX option calls would reduce
the damage from the USTBond carry
trade. The big US banks had used free money
to finance long USTBond futures with
leverage. They suffered staggering
losses in the process.

Despite the valid points made by Kirby, from his experience and perspective,
the
requirement to maintain control cannot
always result in desired outcomes.
The financial world has entered the
land
of Unintended
Consequences of lost control. The
USTBond Asset Bubble is ripe for bursting,
but very slowly, even very uncontrollably.
One cannot assume almost all is under
control because it must be. If
under great control, the Jackass position
is that the TNX never never never
would have moved up so much. The rise
in rates smacked the USFed by $300
billion in lost portfolio value.
It already rendered serious damage
to the real estate market, along with
numerous stock bourses across the
world, in addition to the pension
funds which bought the USTreasurys
when yields were under 2.0% for a
full year. Expect more USTBond dumping
and more Indirect Exchange offloading
by foreign entities. The forecast
call of a rise over 3.0% on the TNX
is not a whole lot worse than what
is seen today. It will cause problems
and soon an Interest Rate Swap derivative
burst of losses is due to arrive.
These derivatives cannot withstand
big moves in the bond yield, like
what have occurred. Usually the damage
is seen a few months down the road,
just like in May 2012.

EuroRaj entered the debate, from his European post and keen view of London.
He expects the USTreasury 10-year
yield (TNX) to tell the outcome of
the information flow, whether scummy
or damaging. The JPM Chief Investment
Office in London
is nothing but a front in his opinion,
designed to suppress USTBond yields
via the vast Interest Rate Swap machinery.
He expects a break above the 2.75%
resistance level very soon. It just
happened!! The worst damage to come,
he warns, is from the Indirect Exchange.
It is very likely already in process
with extremely high volume, enough
to cause problems. China
is going to gobble up Australian gold
miners and pay it off the large transactions
with USTBonds, just like they have
with energy projects in Iran and Saudi Arabia, as well as mineral projects in several
African nations. China is also grabbing peripheral European businesses,
in the payoff process shoving USTBonds
at the weak European banks. These
banks in turn become forced sellers,
since they suffer from deep liquidity
problems which threaten collapse.

Add to the big pot mix a sense of desperation on the part of the bond king himself
at PIMCO. Bill Gross cannot speak
publicly about the Int Rate Swap that
proved his investment transition in
2011 to be extremely damaging, ripe
with lost opportunity during a bond
rally (even if contrived). The
Total Return Fund saw only $5 billion
in redemptions that entire underperforming
year. He has vowed to take control
of the bond market investment portfolio,
following massive redemptions from
investors who suffered losses. Their
Total Return Fund is the flagship
among the PIMCO funds, which collectively
grew in size to $2 trillion in 2008.
In the last few weeks, investors pulled
out $18.7 billion since May alone.
Gross promises higher performance,
but with risk, as he described various
techniques in the low bond yield environment.
They pertain to spreads from non-USTBond
vehicles like mortgage bonds and other
foreign sovereign bonds. The method
also include carry trade, using higher
yields on long-term bonds to gain
profit when shorting the lower yields
on short-term bills. He emphasized
the credit risk element, which could
result in further losses in the treacherous
bond arena. It is the current sea
of asset bubbles. See the Bloomberg
article (CLICK HERE).

Rob Kirby entered the debate. He anticipates the establishment or engineering
of a false narrative to support the
forced reduction in 10-year rates
back to or below the 2.0% mark. By
that he means the USGovt will pour
out story after story on how the USEconomy
has become weaker suddenly, despite
the fact that it has not changed at
all from weak, every single year since
2008. The USDept Treasury has the
ability, via the Interest Rate Swap
devices, to lower rates. He admits
that permitting rates to go higher
does harm to the USTreasury complex.
He points out that JPMorguen is an
extension of the USTreasury itself,
acting as primary market agent. The
bank colossus will not be prosecuted
or thrown under the bus for any violations
ever. The reason they permitted rates
to go up to the current 2.7% range
is to falsely have people believe
there is a fair market, he reasons.
However, there are no free markets.
No financial market anymore has the
freedom to seek equilibrium and fair
prices. There are only interventions.
This point by Kirby was cited in the
July Money War Report with some detail,
including other devices like the income
tax funds used on forward supply.
It is a valid point, about powerful
machinery operated by the Exchange
Stabilization Fund and run by the
USDept Treasury's hired agents on
Wall Street and in London City.

The Jackass came for rebuttal in the debate. The Kirby point is well taken and
understood. But then again, one
can no longer assume that all is under
control. Since late 2008, very
little has been under full control
despite monumental efforts to coordinate
interventions, to strap on lashing
at big bank centers, to patch up toxic
holes with government funds, to hire
sympathetic hack operators to sustain
the rigged game, and to paint false
stories endlessly in support. The
Jackass is in disagreement with Kirby
though, having full recollection of
the factors and devices cited in July.
They use the Internal Revenue Service
tax flow of funds in a special way
to fortify other devices, thus keeping
the USTreasury Bond yield (TNX) down.
The Jackass position is that the
USTBond complex is gradually seeing
lost control, a very slow process
of cut lines, severed cables, and
less effective tools, at a time when
the entire world has begun to stand
in opposition. A major transition
is in progress. While two years ago,
the Jackass position was for a move
down to 1.0% on the TNX, no longer
is such viewpoint held. More learning
has taken place on the treachery of
holding the interest rate derivatives
in place during volatile times, while
foreigners are dumping USTBonds en
masse, not just China.

The many foreign entities are ganging up against the USGovt and defying the
American finance ministry. They are
angry at the unilateral USFed monetary
policy dedicated to hyper monetary
inflation. The USFed policy is
undermining foreign interests, and
debasing their FOREX reserves, causing
losses, and reverberating in their
entire leveraged financial systems.
Their national stock bourses have
been hit hard, without intervention
devices like the United States deploys. As a result, foreign entities
have redoubled their national efforts
to seek a USDollar alternative in
trade, while shifting reserves management
away from the USTreasury Bond as center.

The Jackass does not believe the USDept Treasury permitted the TNX to rise to
2.7% as an intentional maneuver. It
is not so credible that they would
permit such unspeakable damage worldwide,
with $trillions lost in paper wealth,
just to exploit an issue. They have
rendered severe damage to financial
markets and stock markets and real
estate markets across the world. Instead,
it should be seen as a situation where
they said to their own loyal subject
troops, "This has gone somewhat
out of control, so let's exploit the
situation. We must take advantage
of the prevailing perceptions that
do not fully consider the powerful
devices in hidden regular usage."
In my view, it the powerful devices
were available, they would have been
used. They were used. They did not
halt the TNX rise toward the 3.0%
mark. And since the outcome was
a fast rising TNX bond yield, one
must conclude that the devices were
overwhelmed by foreign selling
en masse, by pension fund selling
in volume, by PIMCO redemptions in
volume, and in a nasty reversal of
the big US & London bank carry
trades.

Leveraged bond schemes are a bitch when they go into reverse. Their leveraged
long-term bonds had to be sold when
losses were amplified by the futures
contract leverage. We just witnessed
a severe display of bond convexity,
where the damage to the market was
seen as faster rising bond yields
than ordinarily would have occurred,
from surprising high volume sales
(leveraged) combined with big bank
reversals of carry trades. To be sure,
a rational exploitation by evil camps
can be done to take advantage of a
situation gone somewhat out of their
control. Like allowing the financial
markets to believe the USFed has lost
a little control, soon to be reined
back in. The Jackass believes the
USDept Treasury and the USFed lost
some control and will lose a little
more, maybe a lot more.

Lastly, enter George from Chicago, a savvy veteran with COMEX logistics experience,
with futures arbitrage experience,
with bond derivative experience as
well. He had been the eyes on the
MF-Global crime scene. He focuses
upon the Chinese factor, as they relate
to the USTreasury Bond market, since
it has become historically enormous
as a factor within the many equations.
He points out that China has been gobbling up resources
for a decade, using USDollars in payments.
China has been reducing virtually
all but a small percentage of USTreasury
holdings below 3 years in maturity,
as a policy shift for a full decade.
Any USTBill below 3 years is considered
interchangeable for cash, valued and
treated like cash in the international
market. Consider China
a main participant in Operation Twist,
to switch from long-term maturities
to short-term. The entire operation
might have been forced by China, in fact, just like they forced the nationalization
of Fannie Mae.

The Beijing leaders made a conscious decision on a huge level a decade
ago to divest from USDollars at a
rapid but manageable pace. They concluded
that the US
machine, the mass of American consumers
was tapped out and dying. In George's
view, they concluded that the USGovt
was a mortal enemy with its partner
the USFed, acting with central bank
decisions made that did not serve
China. The decisions actually
did not serve the American interests
either, but rather served Wall Street
interests as highest priority. The
entire Chinese strategy toward Urbanization
and Industrialization has directed
attention to a fostered consumer driven
economy. It stems from and leads to
their attitudes toward USTBond usage
in acquisitions. Missing this grand
Paradigm Shift would mean to miss
one of the monster macro economic
and political shifts of our lifetime,
certainly post-WW2. Agreed totally
with George, a sage veteran who has
provided guidance on numerous thorny
topics.

◄$$$ A RIVAL SAUDI PRINCE HAS DEFECTED TO GERMANY.
HE SPOKE OF BRUTALITY AND OPPRESSION
AS THE GOVERNMENT HAS TURNED FRIGHTENED
OF ARAB REVOLTS. THE UNITED STATES
WILL NOT CRITICIZE THE MONARCHY, NO
MATTER WHAT. HUMAN RIGHTS GROUPS ARE
ON WATCH. BROAD DISSENT IS RISING.
THE DEATH TOLL IS RISING. THE PRISON
POPULATION IS RISING. DISORDER IS
RISING. TEMPERATURE IS RISING. THE
FALL OF THE HOUSE OF SAUD IS APPROACHING,
AND WITH IT WILL GO THE PETRO-DOLLAR
STANDARD. BEHIND THE SCENES THE NATURAL
GAS COOP WILL BECOME A SERRIED PHALANX
TO SEPARATE ARAB MONEY FROM THE USDOLLAR.
$$$

In recent weeks Saudi Arabia has launched
an offensive against anti-regime activists,
using widespread arrests and long
jail sentences. The Ministry of Interior
has taken control with total power,
much like a Gestapo. The total number
of political prisoners has now surpassed
30 thousand, according to some reports.
A critic was recently sentenced to
600 lashes and seven years in prison,
for merely speaking out against Islam.
Welcome Saudi as the latest big
fascist nation with strong ties to
the Anglo axis. The crackdown
has even forced a member of the ruling
family to defect. RT Arabic spoke
exclusively to Saudi prince Khaled
Bin Farhan Al-Saud, who accused the
monarchy of corruption and silencing
dissent. Human Rights Watch is on
the scene. Rumors conservatively of
tens of thousands in political prisoners
have been taken, many denied legal
counsel. Reports has circulated that
a few have been killed in prison.

Saudi Prince Khaled Bin Farhan spoke to RTNews from Dusseldorf
in Germany. He confirmed reports
of increased persecution of anti-government
activists. Such actions forced him
to defect from his country. He accused
the monarchy of severe criminal behavior.
In Jackass view, such actions are
a signal that Abdullah's leadership
is gone. Khaled explained how
the Saudi mechanism for suppression
worked. He said, "There is
no independent judiciary, as both
police and the prosecutor's office
are accountable to the Interior Ministry.
The ministry officials investigate
crimes (they call them crimes), related
to freedom of speech. So they fabricate
evidence, and do not allow people
to have attorneys. Even if a court
rules to release such a criminal,
the Ministry of Interior keeps him
in prison, despite a court order to
release him. There have even been
killings! Killings! And as for the
external opposition, Saudi intelligence
forces find these people abroad! There
is no safety inside or outside the
country." See the exclusive
report by Russia Today (CLICK HERE) that includes
a video.

One might be reminded of the Shah of Iran in the 1970 decade, with the long
reach by the dreaded SAVAK. Under
the orders of Mohammad Reza Shah,
it went deep into Europe to murder
its opponents, like into Germany
and France. As the situation
turns to a boil, the legion of Saudi
princes will flee with hundreds of
$billions of plundered national wealth.
At that time, the Petro-Dollar defacto
standard will be dead and buried.
Watch for the new Persian Gulf protector to arrive with military shields. The story in
Syria
might be important, but not fit for
regular Hat Trick Letter updates.
However, it is the site of the end
point for what could be called the
Shiite Gas Pipeline that originates
from Iran.
Thus the stern opposition by the USGovt.
The Syrian pipeline port will be an
important link in the NatGasCoop,
certain to gain important geopolitical
power under Gazprom's watchful eye.
Ditto for the Iran-Pakistan Pipeline,
with USGovt opposition and Coop importance.
The OPEC union is soon to be splintered,
a spinal chord for the USDollar. The
Saudi disorder receives no US press attention. See the
Pepe Escobar article on SGT Report
about the civil breeding in Saudi
Arabia (CLICK
HERE).

◄$$$ THE FLIGHT OF SAUDI WEALTH BY PRINCES WILL MAKE FOR COMPETITION BY
FASCIST AND DESPERATE BROKEN NATIONS
ALIKE. THE RESULT WILL BE A CONSIDERABLE
FLOW OF USTBONDS SPENT TO RECREATE
THEIR LUXURIOUS LIFESTYLES. HENCE
MORE INDIRECT EXCHANGE IN REDEEMED
USTBONDS, RETURNED TO ANGLO SENDER.
$$$

Enterprising people might do well to start a Vegas line on when the House of
Saud falls, an ended regime in disgrace,
tyranny, and pilferage. The Jackass
estimate for the fall of House of
Saud is 14 to 18 months, around end
2014. Watch the scared princes scatter
with hundreds of $billions to Spain,
France,
Great Britain, the United
States, Switzerland,
and Persian Gulf
hideyholes. Their wealth will be welcomed
by fascist and rebuilding nations.
They might be hunted by the Saudi
natives, and reform driven tribunal
officials, looking to recover plundered
national wealth. Some irony might
come, as welcoming nations might exact
a heavy price for offered asylum by
the bandit princes who abscond with
Sau di national wealth.

The fascists nations would be the most comfortable, like the UK
and US, the axis of global fascism.
The nations might turn around and
sell the USTBonds, creating more bonds
returned to the sender, more Indirect
Exchange dumped back on New
York and London bankers. Imagine France and Spain offering asylum for the price of $10 billion
per prince, plus $3 billion per family
member. Recall these low life inbred
thieves have several wives. In
addition, the fleeing princes would
immediately embark on construction
projects, to build grand super-mansion
estates, monuments to their outsized
egos. The locals would welcome
the job opportunities. The displaced
royals would purchase banks and shopping
malls, but not have the luxury to
extort money in appropriation from
the local enterprises, a favorite
royal practice done in Saudi Arabia. The combined spending would make
for hefty USTBond redemptions, and
more Indirect Exchange. Many are the
channels directed in redemptions of
toxic paper.

◄$$$ CHINA HAS ACCUSED THE UNITED
STATES OPENLY OF TRYING TO CONTROL
NATIONS. THE PUSH FOR FREEDOM AND
DEMOCRACY IS REALLY FOR CONTROL OF
RESOURCES AND ESTABLISHMENT OF FINANCIAL
OUTPOSTS. THE FOREIGN NATIONS HAVE
NOTICED THAT WESTERN DISARRAY IS NOT
DESIRED FOR EXPORT. ALL TOO OFTEN,
SOLDIERS DIE FOR A SYNDICATE MOTIVE.
$$$

A direct and somewhat scathing article came out of China
about the United
States and their
push for freedom and democracy around
the world. The Beijing
leadership accuses the US
of hegemony and indirect sinister
pursuit of resources under the false
banner of freedom and democracy.
The article was approved by the government
controlled Chinese news site, the
Peoples Daily. With the direct confrontation,
China
removes the mask from the US,
with descriptions of taking control
of nations without a shot being fired,
from doled out friendly advice. They
warn the USGovt to stop doing what
they are doing in China,
causing a clash of cultures. The object
of pursuit is all too often resources
of foreign nations, whether in Iraq
(oil) or Aghanistan (heroin). Some
hypocrisy is noted, as the USMilitary
deploys drone weapons that kill civilians
on a routine basis, while maintaining
the embarrassment of the Guantanimo
torture center in Cuba.

China is clearly saying to halt the promotion of Western Values
in China,
while making reference to how the
US has caused the Russians some problems from
promoting Western values there. Any
legitimate push with integrity for
Democracy and Freedoms would not involve
the all too frequent USGovt support
of dictators who commit genocide when
it serves a purpose (see Mugabe in
Zimbabwe).
Any push should not attempt to select
a better dictator (see Syria, Yemen). Any such push, if honest and sincere,
would not follow the scrapping of
the US Constitution and Bill of Rights
in favor of the misnomered Patriot
Act (better labeled a Nazi Manifesto).
That the US
President was bestowed a Nobel Peace
Prize has diminished the value of
all past such prizes, even redefined
peace through war. In 2013, the re-elected
Obama announced the broad support
of democracies on several continents,
for those yearning for freedom. In
2008, Obama campaigned with a promise
to shut down the torture chambers
in Guantanimo.

The current decade is a far cry from past decades, when legitimate calls for
democracy, human rights, and freedom
did indeed carry a halo of sanctity.
After the passage of decades, the
scrutiny has changed, bringing with
it questions about why the situation
in Western nations, whether financial
or political, is in such decrepit
condition and disarray, with colossal
loss of wealth and forfeited industry,
including complete banker criminal
impunity. The East does not want
export of these slimy scummy values.
Other questions follow, wondering
why conditions have grown worse after
a variety of color revolutions in
countries touched by US foreign policy. It seems
destabilization and chaos are the
ends, not just the means.

A certain resistance is evident to prevent the onset of Western hegemony, to
which some in object nations are willing
to be enslaved. Nations like China will choose to retain their identity, their
culture, their devices, and their
theories. Their native system will
be welcomed for winning the support
of its people, during the revival
of the Chinese nation. A case in point
from a Chinese perspective. Lin Yifu
worked for several years in the World
Bank. In his quest to gain expertise
from the West to help with Chinese
economic development, eventually he
came to realize that the West is far
from perfect, often beset with problems.
Many countries and regions have succeeded
in achieving development without slavishly
adopting the Western methods and platforms.
Clearly, economic and political structures
share common features. Success will
come with a clear view, independence
of thought, and the capacity to learn
and achieve steady improvement through
fair systems and innovative opportunity.
As with individuals, so with countries.

A facade is being pulled away. Other nations see through the United
States while
they push for freedoms around the
world. The ulterior motive is visible.
Many leaders have pointed out behind
closed doors the indirect hidden motive.
For the first time in recent memory,
a shot has been fired across the bow
of the expansive (if not imperalist)
United
States by a superpower.
The US
has been warned by China
to stop what they are doing so boldly
with interference. If only the people
of the US
could see more clearly what the nation
is doing overseas. The sacrifice of
soldiers in the USMilitary is all
too often not for freedoms, but instead
for US control and domination of other
lands for their resources. See the
Sherry Questioning article (CLICK
HERE).

◄$$$ CONGRESS AS FAILED INSTITUTION, TRUST LOST, NO ACTION. $$$

The political gridlock is a nasty reality. The lack of action is obvious, especially
toward the deficit and spending, even
the endless wars, especially the march
toward a police state. The special
interests have turned obscene. Against
the background where control levers
are pulled by the bankers and military
contractor arms, the public does not
believe members of the USCongress
are doing a good job. In a recent
Gallup
poll, Americans gave the current Congress
the lowest confidence rating ever
measured for any institution in 40
years. An assortment of ratings were
provided, the trend being lost confidence
over the last couple decades. It is
difficult to see how the trust ratings
could go any lower. Petty partisan
politics and failure to make important
decisions led the list of complaints.
The public is very disenchanted, but
this is the only government offered.
Unlike the finance sector, where individuals
can escape the corrupt game with gold
& silver ownership, the political
stage is one to observe during the
collapse with horror. See the Zero
Hedge article (CLICK HERE).

◄$$$ THE BANK OF ENGLAND HELPED THE
REICHSBANK SELL PILFERED NAZI GOLD
DURING WORLD WAR II. THE ANGLOS ACT
MORE LIKE NAZIS THAN GIVEN CREDIT.
THEIR HISTORY IS LONG AND ESTABLISHED.
BRITISH AND AMERICAN BANKERS EVEN
FINANCED HITLER. THE CORE OF THE FASCIST
CORE IS COMPRISED OF BANKERS, NOT
MILITARY. $$$

To set the criminal environment, the Bank of England has exhibited flagrant
behavior in hiding of the truth about
the Bundesbank official gold stored
in the New York Fed vaults. Soon
after a bold refusal by NYFed officials
to even permit a viewing of the German
official gold, the Bundesbank dramatically
shifted its position to demand that
its gold be repatriated back to Germany.
Chaos has resulted since in the entire
gold market during a scramble to avert
failure. The scummy history of London
goes further. In yet another one of
the darkest episodes in central banking
history, the Financial Times reports
the Bank of England facilitated
the sale of gold widely looted by
the Nazis after their invasion of
Czechoslovakia in 1938. The pattern
of central bank activity appears scandalous,
egregious, diabolical, with collusion
toward crime organzations. Wall Street
is an extension of London.
Few seem to realize, the American
and Anglo bankers are nazis. Check
their past relationships and even
bloodline. Leave out any ethnic or
religious assumptions. Follow the
deeds and alliances. See the Zero
Hedge article (CLICK HERE)
and the Financial Times article (CLICK
HERE).
Worse, the bankers in Wall Street
and London City financed the Hitler war machine.
See the YouTube video (CLICK HERE).

Many wonder who are these modern hidden fascists. In March, the Hat Trick Letter
reviewed the fascist links to the
Vatican
and the new Pope Francis. Notice Pope
Fascist sounds a lot like Pope Francis.
Start the modern list with Bush, Kissinger,
Clinton, Paulson, Dimon, Blankfein,
Bernanke, and Greenspan. Add Grasso,
Geithner, Summers, Feldstein, Rubin,
Mack, Bloomberg, Schumer, Cuomo, Tenet.
The deeply hidden members are Rothchild,
Rockefellers, the Bilderburg group.
May they all see justice, or a sweet
view of sharks in underwater prisons.
On the Fascist list, leave out Milton
Friedman and Paul Samuelson, noted
economists, not to be confused with
bankers. The arch enemies to the fascist
bankers reside in the School
of Austrian
Economics. Many shared some ethic
background in common, but the likes
of Von Mises, Shumpeter, Rothbard,
Von Hayek, Horwitz, and Weber despised
the Wall Street arrogant criminal
class of economists. After WW2, these
fine expert Austrian economists were
shunned by Wall Street and shown great
disrespect.

## BIG BANKS AS CRIME NEXUS

◄$$$ BANKSTERS OPERATE FREELY IN CRIMINAL ENTERPRISE.
BANKER CORRUPTION IS THE NEW NORMAL.
THE USGOVT HAS BEEN TAKEN OVER, CONTROLLED
BY THE BIG BANKS, SUBORDINATED AND
TAPPED FOR ITS WEALTH. THE NATION
IS HEADED FOR A CERTAIN FINANCIAL
COLLAPSE AND ENDURING DEPRESSION.
$$$

On an increasing basis, big powerful banks like Goldman Sachs and JPMorguen
have set their hooks into governments,
financial markets, and even the military
security apparatus. They have taken
control of the USGovt and the news
networks, swaying decisions and shaping
public opinion. The biggest of banks
have emerged as the role models in
competitive battles to thrive and
to survive. In the shadows of the
Fascist Business Model, mass corruption
has arisen as the new normal for big
global banks. Analyst Barry Ritholtz,
author of "Bailout Nation"
and lead contributor to The Big Picture
website for exposure of the big banks
conspiracy, has detailed the pandemic
of corruption across America and the global banking world. His terminology
uses the term Manipulation to mean
corruption, fraud, scam, conjob, gaming,
cheating, misrepresentation, rigging,
and price fixing. He accuses the banking
industry of being deeply committed
to broad but subtle conspiracy of
unethical, dishonest, illegal, and
blatant criminal behavior in pursuit
of profits and maintained position
of control. They defraud investors
and tap into taxpayers, deceiving
the government, buying off politicians.
In doing so, they set up the United
States for a
massive crash and climax in systemic
failure.

The conditioning of participants has occurred, so as to justify the corrupt
behavior in most corners of the financial
sector and its many extensions through
the economy. Most every market is
rigged. The populace accepts the rot
as the new normal, as does the business
community. The USGovt is under direct
banker influence, inducing fiscal
policy to institute extreme deep banker
welfare, which does not aid or stimulate
the economy. The US
Federal Reserve was a major cause
of the current unresolvable crisis,
and banker welfare only locks the
nation in that crisis with wealth
drained off. This is precisely
the Modus Operandi of the champion
fascists. To stabilize the economy,
the big banks must be broken up, but
they own the USGovt politicians. This
prime failing is the main theme of
the Hat Trick Letter for several years.
The US
nation is being driven into the Third
World with a certain collapse and
stinging depresssion. See the Market
Watch article (CLICK HERE)
which includes dozens of specific
examples of deep corruption. The capitalist
body has been hollowed out and gradually
destroyed on a systematic basis. The
ideals of Adam Smith have been gutted.
Crime prevails. However, a grand
global reaction has formed, as numerous
elite powerful groups have decided
to oppose them, to isolate them, to
remove them. It remains to be
seen whether that happens with an
outbreak of war and pestilence.

◄$$$ JPMORGUEN FINES AND PENALTIES ARE PAID, A RISING LEDGER ITEM AS REGULAR
FEATURE IN ITS FINANCIAL STATEMENTS.
REGARD IT AS COST OF DOING BUSINESS
FOR A CRIMINAL ENTERPRISE, JUST ANOTHER ITEM. $$$

The JPMorguen fortress is slowly crumbling, with deep cracks showing. The Jackass
theory is that under the Fascist Business
Model, which began under the Clinton
Admin, truly flourished after 911
with billboard signals to expand fraud.
Criminal activity is protected by
the USGovt, with total impunity for
any and all felonies, including murder,
which is managed by the US security agencies. Under the model, crime has
a cost, just another business cost,
in fact a relatively minor cost until
recently. The quintessential turning
point for recognition was the fine
for money laundering of narcotics
funds paid by Wachovia in 2009, in
connection with Mexican drug cartels.
The courts ordered a fine of 0.03%
of volume transacted, under 1/30-th
of one penny per dollar. Crime does
pay for the protected big banks, considered
far worse than simply too big to jail.
Recently, the costs have risen dramatically.

In the last two years, JPMorguen has paid out a whopping
$7 billion in fines for a wide range
of violations and improprieties. The big bank's once sterling image
has been tarnished beyond repair.
In 2008, the bank tried to refuse
a bailout from the infamous TARP Funds.
The CEO Jamie Dimon, reputed to chase
wives of associates, led the market
to believe the robust institution
could handle anything thrown at it.
Then the London Whale came along to
shatter the fortress image completely,
no more omnipotence for image. Lies
and losses followed in succession.
Slowly the revelations came that
their vast $50 trillion derivative
book where the Whale swam was not
solid, of a size that could crater
entire nations. What has grown
recently out of control is the string
of litigation cases lined up against
JPM. It has become a court case magnet
even greater than Bank of America.

The new impression that paints the nastiest and most
corrosive of coats on its image is
that the big bank's success for a
decade has been an extension of criminal
activity. And the cases have not touched the
Afghan narcotics money laundering
via the Iraqi Export Bank under their
charge. The executives and legal counsel
have become experienced and expert
at dealing with criminal case resolutions,
which admit no guilt and pay out heavy
fines. The settlements rack up, just
like the victims. Review a summary
of the recent JPM exorbitant and seemingly
endless fines, courtesy of the Daily
Beast (CLICK HERE).
Recall a few months ago, a special
report was scribed in the Hat Trick
Letter devoted specifically to JPMorguen
and its criminal facades. Close with
a dastardly defiant devilish quote
by the CEO himself. Dimon said, "These
fines hit the bottom line to be sure.
But if I had to do it all over again,
I would not change a thing. It was
worth it." Indeed, crime
pays for big US banks.

◄$$$ JPMORGUEN WAS OFFICIALLY ACCUSED BY THE F.E.R.C. REGULATOR OF MANIPULATING
THE POWER MARKET. THE FINE DOLED OUT
WAS A TRIVIAL PITTANCE, A MINOR COST
OF DOING BUSINESS FAR LESS THAN A
BILL FOR KEEPING LIGHTS ON IN THE
BUILDINGS. $$$

The news headlines were clear, that JPMorguen had manipulated the electrical
power market, or manipulating energy
contract bid strategies. Bloomberg
heralded the violations, having taken
place in California
and the Midwest
between September 2010 and June 2011,
according to the Federal Energy Regulatory
Commiss ion. Using the regular
method of business, the big bank agreed
to pay sanctions that include a fine
of about $400 million, with the potential
to forfeit excess profits at a later
date. Sounds like a big sum of
money, but not really. The federal
agency had investigated the market
activities of the JPMorgan trading
unit for more than a year. Case closed,
with $99.5 billion in projected 2013
revenues, and fines that amount to
about 0.4% of revenue earned. The
cost is less than electrical lighting
at office facilities, but much more
than the Wachovia drug money laundering
fine a few years ago. See the Zero
Hedge article (CLICK HERE).

◄$$$ JPMORGUEN PLANS TO EXIT THE COMMODITIES TRADING BUSINESS, SO THE
STORY IS TOLD. HARDLY LIKELY. JPMORGUEN
WILL PROBABLY NOT DEPART FROM THE
IMPORTANT PRICE FIXING BUSINESS FOR
COMMODITIES AT ALL. THEY WILL MANAGE
THE TASK AT ARM'S LENGTH, USING THEIR
SUBORDINATED BOY. $$$

Rather than giving attention to the official story, consider the headline that
JPMorguen plans to spin off its commodities
trading unit. The action is questionable,
while the real motive is dodgy. It
sounds like a noble gesture, to step
aside and permit the free market to
work, and to seek equilibrium. Never
give such thoughts more than a second
of time. Methinks it is a BS story.
JPMorguen will never walk away from
any market, since it can do whatever
it wishes with 99% impunity and permit
to steal. Consider that Morgan
Stanley runs the commodity trading
main desks on Wall Street, as the
official resident harlot for hire.
Just a phone call away. They take
orders from JPMorguen and Goldman
Sachs. The Morgan Stanley crew
of skilled market riggers is in charge
of the Interest Rate Swap shop and
the energy shop at Platts.

Consider some viable motives. It could be that JPM wishes to bury some old bones
in a designated outhouse they wish
later to kill. They might prefer to
export what eventually becomes a black
hole in implosion. Perhaps they will
jettison the vulnerable pieces, and
concentrate efforts on offshore subsidiaries
in a more hidden manner, such as were
used with Enron in collusion with
other giant Citibank and esteemed
Harvard Univ. Be sure to know they
will sidestep whatever liability that
appears. Recall the profound liability
they held with Enron. The associated
evidence perished in the infamous
Building #7 at the World Trade Center.
If it had been demolished off the
Manhattan
island, some attention would have
been given the event. Expect business
as usual for the House of Morgan in
the commodity business, with hidden
hands at work, and maybe a scuttle
in the near future. See the Bloomberg
article (CLICK HERE)
and the CNN Money article (CLICK HERE).

◄$$$ CRIMINAL FINANCIAL FRAUD IS JUST A SMALL PART OF DOING BUSINESS FOR
CITIGROUP ALSO. A JUDGE APPROVED A
$590 MILLION SETTLEMENT WITH CITIGROUP.
OF COURSE, NO GUILT ADMITTED, AND
BETTER YET, NO OPEN COURT TRIAL WITH
THE ATTENDANT RISK OF A HUGE DAMAGE
AWARD TO STOCK HOLDERS FOR HIDING
SCUMMY MORTGAGE ASSETS ON ITS BALANCE
SHEET. $$$

Citigroup used to have a big mortgage liability hanging over its head. It might
still have some lingering liability,
but some risk has been chipped away.
A federal judge gave final approval
in the last week of July to a $590
million settlement by Citigroup Inc.
The deal resolves a shareholder lawsuit
accusing the bank of hiding tens of
$billions in toxic mortgage assets
from its balance sheet. The bank had
been made to look more healthy to
stock investors by the ongoing deception.
US District Judge Sidney Stein in
Manhattan
wrote, "Although the $590
million recovery is a fraction of
the damages that might have been won
at trial, it is substantial and reasonable
in light of the risks faced if the
action proceeded to trial."
Highly doubtful, Sidney!
A court trial might have resulted
in a few $billion in damages, especially
with public hatred of banks growing
each month. See the Reuters article
(CLICK HERE).

Deutsche Bank announced it will reduce its balance sheet by EUR 250 billion
(=US$330 bn) so as to comply with
stricter capital rules, in much the
same manner as Barclays and UBS. DBank
will liquidate some of its EUR 73
billion asset portfolio. It claims
it will change its derivatives accounting,
but offered little information on
details. A proper derivative accounting
would reveal a EUR 20 billion capital
shortfall. The big European bank
(biggest) announced 49% lower income
for 2Q2013, coming in at EUR 334 million,
a wide miss by half on expectations.
The kicker was a massive increase
in Loan Loss Reserves, to be tapped
from anticipated legal settlements
lined up on the court docket. Co-CEO
Jain openly stated an expected acceleration
of settlement costs in the coming
quarters. The funds set aside at end
Q2 were EUR 3 billion. That means
EUR 5.4 billion in funds set aside
in the last two quarters, just
for awards in court cases, lawsuits,
with penalties and fines, including
potentially restitution of bond victims.
The insolvency rumours surrounding
Deutsche Bank are persistent, impressive,
and from reliable corners. The bank
faces daily death threats from implosion.
See the Bloomberg article (CLICK HERE).

◄$$$ DEUTSCHE BANK IS DELEVERAGING AT THE FASTEST PACE SINCE THE CRISIS
OF 2011. THIS IS THE OLD LEGACY DERIVATIVE
BOOK ACQUIRED FROM BANKERS TRUST IN
1998, WHICH GREW MUCH BIGGER. BEWARE
THAT D-BANK HAS A BOOK EVEN LARGER
THAN JPMORGUEN'S, AND D-BANK IS IN
THE PROCESS OF FAILING. NOTHING CAN
STOP ITS FAILURE. $$$

Deutsche Bank is the biggest derivative bully on the block in the Western world.
Its total gross derivative exposure
of EUR 55.6 trillion is even bigger
than that of JPMorguen. Much consternation
within German political circles has
arisen, since its death is a constant
worry. Recall that Deutsche Bank back
in 1998 acquired Bankers Trust from
New
York. It was a huge event, but little
noticed. BT was a huge computer customer
of my old Digital Equipment Corp firm,
the Jackass employer from 1980 to
1993. BT was called the USFed's private
bank, a grand silo of derivatives,
which no US-based bank was large enough
to acquire in prevention of a massive
failure that would have been an order
of magnitude larger than Lehman's.
The derivative collapse threat has
origins back in 1998. This is not
a new phenomenon.

Back in May 2012, the Zero Hedge vigilantes provided
disclosure that the Core Tier 1 ratio
at Deutsche Bank was the worst of
any bank in Europe,
and the entire world. This viewpoint was reinforced by former Kansas Fed president and current FDIC
Vice Chairmam, Tom Hoenig. He called
Deutsche Bank so horribly undercapitalized,
it is ridiculous. One could easily
extend the conclusion that almost
every big US and London bank is horribly
under-capitalized. Notice the two
Deutsche Bank net derivative exposures
since 2011. Something hits the observer
in the face. Over the past year, the
nominal net exposure of the bank's
positive and negative derivative market
values has collapsed from a combined
total of EUR 1.678 trillion to just
EUR 1.253 trillion. In fact, over
each of the last four quarters it
has shown consecutive declines for
a cumulative net deleveraging of EUR
425 billion.

Notice that bank deposits are in rapid decline, a 20% decline in deposits in
twelve months. They serve as capital
core, rapidly vanishing. If the exposure
declined with a constant capital core,
it would flash a healthy signal. A
reasonable person would therefore
inquire with due diligence, as to
why the biggest bank in Europe was
deleveraging at the fastest pace since
Europe's near-death
experience in the summer of 2011.
Stand clear, as the biggest bank in
the entire world is about to collapse.
It is shrinking as fast as it is eroding
in the capital base. See the Zero
Hedge article (CLICK HERE). More attention was given
to Deutsche Bank when Max Keiser mentioned
that the big teetering bank was officially
on suicide watch, according to his
Swiss fund source. See the Silver
Doctors article (CLICK HERE).

◄$$$ BARCLAYS FINALLY ADDRESSED ITS EXTREME INSOLVENCY. THE BIG LONDON
BANK WILL RAISE $12 BILLION IN NEW
CAPITAL TO DEAL WITH A CAPITAL SHORTFALL.
THEY INTEND TO CLOSE THE GAP THAT
HAS LEVERAGE AT 2.2% (EXTREMELY LOW).
AN $8.9 BILLION STOCK SALE WILL TAKE PLACE, DONE AS A RIGHTS ISSUE AT DISCOUNT TO EXISTING
SHAREHOLDERS. THE DILUTION WILL BEGIN,
WITH LIQUIDATION DONE LATER. $$$

A kingpin bank in London is Barclays. It is involved in everything under the financial
sun, and most of it is corrupt, related
to price fixing. A large slice of
every business they are involved in
is insolvent. They had to react to
capital requirements, adding more
capital. The Jackass belief is
that Barclays will need fresh capital
every several months, since it is
burning capital rapidly. The new
Basel III Rules might have played
a role in pressuring action by the
broken bank. It still has managed
to wiggle out of responsibility and
damage awards from rigging the LIBOR
money market. That liability runs
in the hundreds of $billions, according
to bank analysts of repute, not the
harlots who ply their trade in New
York and London.
The colossus Barclays announced
in late July that they will raise
$12 billion in new capital. They do
not state future needs though, or
a capital burn rate from ruined business
segments. Such news items will
be seen as future surprises.

Barclays disclosed it will raise up to GBP 7.8 billion, equal to US$12 billion,
in new capital after the bank reported
a GBP 168 million loss in 2Q2013.
The big brokers Barclays, Credit Suisse,
Deutsche Bank, Bank of America Merrill
Lynch, and Citigroup are coordinating
the planned multi-billion capital
offering. The thrust would be to increase
the qualifying Tier One securities,
to reduce leverage by up to GBP 80
billion though risk management actions,
and to retain earnings to boost capital.
The big British bank, beset by a series
of scandals that has forced it to
pay huge settlements and set aside
billions of Pounds for legal costs,
has come under pressure from British
authorities to improve its capital
position. The local regulators judged
their leverage ratio dangerously low,
a measure of deployed credit to assets
on the books. A major negative
turnaround is in progress, seen by
comparison to a GBP 746 million profit
in Q2 of year 2012. Revenues were
about even with the past.

As part of capital infusion, the British bank will raise GBP 5.8 billion through
a Rights Issue of stock. Launched
in September, it will give existing
investors the opportunity to buy one
new share for every four shares that
they currently own, the price at a
40% discount to a given recent day's
closing price. Dilution is the outcome.
The size of the equity increase is
much larger than expectations. The
corrupt bank also plans to issue up
to GBP 2 billion in contingent capital,
which are financial instruments converted
to equity if the total firm capitalization
falls below a certain threshold. It
plans to reduce assets on its balance
sheet by up to GBP 80 billion in order
to lift its leverage ratio to 3% by
June 2014. Repeat that, they plan
to reduce the portfolio by GBP 80
billion! The Barclays stock price
fell almost 6% in the London
morning trade activity on the day
of the announcement. The bank said
the capital raising and other efforts
to improve its balance sheet would
help to close a GBP 12.8 billion gap
that the Prudential Regulatory Authority
said had reduced its current leverage
ratio to a paltry 2.2%, claimed the
British regulator.

The bank has been adjusting, adapting, and remolding itself since the series
of scandals, led by LIBOR price fixing.
The moldy microbes are still there,
the odor still strong. Barclays announced
plans to shift its focus towards a
smaller number of activities in its
investment banking operations, as
well as to reduce its exposure to
unprofitable business units in Continental
Europe. All the while during redecorating
the vile walls, Barclays continues
to suffer from legal problems. It
set aside an additional GBP 2 billion
during the second quarter for legal
costs. The focus in legal wrangling
has been inappropriate selling of
insurance and complex financial hedging
products to its clients, whose legal
costs include a related GBP 1.35 billion
charge. A further GBP 650 million
provision was made for reckless sales
of financial hedging products to small
and medium-sized business customers.
The investment bank reported a meager
increase to 1 billion Pounds in its
pre-tax profit, from trading activity
hampered by declines in the many financial
markets. However, the firm's corporate
banking division doubled its pre-tax
income to GBP 219 million, while the
credit card division saw its income
rise 2% to GBP 412 million. See the
New York Time article (CLICK HERE)
and The Street article (CLICK HERE).

◄$$$ THE NEW EUROPEAN UNION BAIL-IN LAW WAS HURRIED THROUGH, BUT THE TEMPLATE
WAS PREMEDITATED AND CLEAR. CONFISCATIONS
WILL ENABLE WIDESPREAD POVERTY, THE
HIDDEN GOAL. THE BAIL-IN PROCESS WILL
IN NO WAY RESTORE SOLVENCY TO THE
BANKS. BY SEPTEMBER, THE MOMENTUM
OF COLLAPSING BANKS WILL BE MORE EXPLICIT
AND STRONG. THE PRIME DEATH WATCH
IS THE ENTIRE SPANISH BANKING SYSTEM,
THE BIG SOCIETE GENERAL BANK IN FRANCE, AND THE ROYAL BANK OF SCOTLAND IN GREAT BRITAIN. $$$

The European Commission rushed its new bail-in law through the European Parliament
at the beginning of August. When the
United
States returns
from vacations after September 2nd,
and when the German elections are
completed on September 22nd, expect
to see more rampant momentum in bank
collapses. Some analysts believe the
risk is high for premature bank failures
during the idle final days of the
August month, when desks are often
not staffed fully. Be sure to know
that despite nice sounding words about
protecting shareholders and creditors,
the depositors will see their accounts
confiscated and ransacked. The
key fascist motive is to inflict poverty,
not to repair the banks and financial
firms. MF-Global was not fixed,
but rather dissolved.

The situation in Southern Europe does not improve. It worsens
by the month. The Spanish bank exposure
to Portuguese sovereign debt, as well
as unrealized domestic losses on Spanish
real estate loans, are two reasons
a collapse is inevitable in the once
proud nation. It is the land in focus,
with horrendous unemployment over
25% to boot. Spanish bank exposure
to Portugal
is higher than French bank exposure
was to Greece in early 2010. A restructuring of Portuguese
sovereign debt like what was done
by Greece, which involved writedowns of over 50%,
would wreak havoc on Spain's
banking system. Spain
will collapse! All parties are
delaying the inevitable, as writedowns
on government debt and property debt
are hitting quickly. The result is
obviously going to cause bank failures.

No parties, whether finance ministers or regulators or bank officers, wish to
start the bank failure chain reaction,
as contagion is a certainty. The
Slog judges the most worrisome potential
casualty to be Deutsche Bank.
The main point of contention is that
the bank must absorb a monstrous hit
on currency swaps. Last month Max
Keiser described the bank as on suicide
watch, and in June the FDIC vice chairman
Thomas Hoenig called Deutsche Bank
horribly undercapitalized. Another
commonly mentioned bank in the troubled
category is Societe Generale of France. It will die
a horrible death. However, the
Slog favorite for Collapse of the
Century in his words remains as Royal
Bank of Scotland. It is the people's bank of Great
Britain, with
mortgage losses side by side with
the lost wealth of home equity across
its eternally cloud covered lands.
See the Slog article (CLICK HERE).

◄$$$ THE ARAB HAWALA SYSTEM IS ON THE RISE FOR WIDESPREAD USAGE. THE ARAB
NATIONS ARE MOVING AWAY FROM THE WESTERN
BANKS FOR BASIC TRANSFERS. THE HAWALA
SYSTEM IS FASTER AND CHEAPER, AND
MORE EFFICIENT, WITHOUT THE DELAYS
(KITING) AND INTERFERENCE OF COMMERCE.
THEY BOAST QUICKER CASH TRANSFER,
LOWER FEES, AND FEW MONEY TRAILS.
$$$

Hawala means transfer in the Arabic language, also known as hundi. It is an informal value transfer system based on the performance
and honor of a huge network of money
brokers, which are primarily located
in the Middle East, North
Africa, the Horn of Africa, and the Indian subcontinent. It is basically a parallel or alternative remittance
system that exists or operates outside
of, or parallel to traditional banking
or financial channels. Hawala has
its origins in classical Islamic law
and is mentioned in texts of Islamic
jurisprudence as early as the 8th
century. Exploding in recent months
in usage and popularity, Hawala is
believed to have arisen in the financing
of long-distance commerce around the
emerging capital trade centers in
the early medieval period. In
South Asia, it
appears to have developed into a fully-fledged
money market instrument, which was
only gradually replaced by the instruments
of the formal banking system in the
first half of the 20th century. Today,
hawala is used mostly for migrant
worker remittances to their countries
of origin. In the most basic variant
of the hawala system, money is transferred
via a network of hawala brokers, or
hawaladars. It is the transfer of
money without actually moving it.
In fact, a defining goal of the Hawala
system is money transfer without money
movement, from clever management that
is not direct exchange.

Hawala is attractive to customers because it provides a fast and convenient
transfer of funds, usually with a
far lower commission than that charged
by banks. Its advantages are most
pronounced when the receiving country
applies unprofitable exchange rate
regulations (as has been the case
for many typical receiving countries
such as Pakistan or Egypt) or when
the banking system in the receiving
country is less complex (e.g. due
to differences in legal environment
in places such as Afghanistan, Yemen,
Somalia). Moreover, in some parts
of the world it is the only option
for legitimate funds transfers, and
has even been used by aid organizations
in areas where it is the best functioning
institution. Furthermore, the transfers
are usually informal and not effectively
regulated by governments, which is
a major advantage to customers with
tax, currency control, immigration,
or other concerns. In some countries
however, hawalas are actually regulated
by local governments and hawaladars
are licensed to perform their money
brokering services. See the Wikipedia
description (CLICK HERE). One banker source reports
an enormous rise in the usage of hawalas
across the Middle
East, as they avoid the Western banks,
due to distrust. Look for the USGovt
to declare them as terrorist funding
mechanisms. As the Western banking
system further implodes, look for
a Hawala broker in a neighborhood
near you. Perhaps Western
Union and MoneyGram will adopt their
more efficient and established methods.
They could take business away
from the broken banks.

## SYSTEMIC FAILURE AT THE DOORSTEP

◄$$$ THE EMBASSYS SHUTDOWN EVENT IS SIGNIFICANT. MANY ARE THE SUSPECTED
MOTIVES. NOTHING IS CERTAIN. NATION BUILDING IS
NOT PART OF ANY PLAN, BUT DE-STABILIZATION
INDEED IS ALWAYS. MONEY IS MOVING
FAST. REGIMES ARE FALLING. SUPPORT
BY ARAB NATIONS OF THE PETRO-DOLLAR
IS BEING CHIPPED AWAY. $$$

The shock announcement in late July that the United
States would
close numerous embassies has come
with scattered reports on the underlying
motive. The Swiss Federal Intelligence
Service (NDB) reported a stunner for
a reason. As a result of Obama
Admin fears of further computer thefts
of top-secret documents relating to
the WashingtonDC regime's collusion
with extreme Islamic terrorists groups
in connection with the Libyan Embassy
attack, the several MENA embassies
were be shut down. The Swiss agency
surmised that doing so would allow
them time to purge all of their embassy
computer servers of incriminating
information. The main focus has been
on details relating to the true events
of the 2012 Benghazi Attack led by
hired rogue CIA agents. A tireless
US
Congressman Trey Gowdy warned the
agents were being kept from testifying
before the USCongress, as they had
been relocated and given new identities.

Other justifications are possible, not exclusive of the above motive, for the
widespread embasy shutdowns across
the Middle East & North Africa
region. They could be budget cuts
for the countless embassies. They
could be to buy time to purge other
files back in the myriad USGovt offices.
They could be tend to local contacts,
as in their elimination (i.e. bribed
silence or murder). They could be
to clean up materials, weapons, and
cache of USDollars, even narcotics
stored at the embassy sites. They
could be to take defense against over
1000 escapees in prison breaks, a
development that would far reaching
in importance. Opponents to the USGovt
and its Banker Syndicate leader corps
might have reached a critical mass.
Reports swirl that several major
global elite groups worked to pressure
the USGovt leaders to take steps toward
reversal of their key role in creating
violence toward popular uprising and
insurgence using outside agents in
numerous Arab and Moslem nations.
The USGovt dons are being attacked
on all flanks, as their time is running
out. See the EU Times article (CLICK
HERE).

◄$$$ AN EPIC INTERNAL BATTLE IS ON FOR CONTROL OF THE USGOVT BETWEEN
THE WHITE HATS AND BLACK HATS. IT
IS TAKING PLACE WITHIN THE RULING SECURITY AGENCIES WHICH TOGETHER HAS
SACKED CONTROL OF THE NATION SINCE
2001, ON THE DARK DAY OF SEPTEMBER.
VARIOUS GOOD ELEMENTS HAVE FORMED
AN ALLIANCE BUILT AROUND THE PENTAGON JOINT CHIEFS OF STAFF, TOGETHER
WITH WHITE HATS IN VARIOUS SECURITY
AGENCIES LIKE AT THE PENTAGON. $$$

There are encouraging yet unsettling stories circulating, far more tangible
and reliable than simple rumors. Reports
are persistent and broad about an
intense internal struggle between
the Pentagon and the CIA, a war between
nefarious security offices and moral
virtuous security offices, in pitched
hidden battle for control of the highest
levels of the USGovt. A breaking
point in the long-term conflict has
surfaced over events surrounding Benghazi
at the Libyan Embassy. It appears
that treason once again is the issue,
and dead Navy SEAL soldiers were not
tolerated by the White Hats at the
USMilitary high command. SEALs are
elite warriors of the highest skill
and tribute. The details are muddy,
but it is reported that people working
for the CIA and the State Department
were not in agreement with soldiers
who work for the Pentagon. It is confusing,
to be sure. The National Security
Agency is the agency that is spying
on everybody, the focal point hive
of Black Hats. The NSA in my view
is a monolith with ultimate self-proclaimed
power. It has in recent years hogged
budget increases and pushed through
budget cuts for its rivals. The FBI
has been converted into a Gestapo,
and in my view might be culpable for
numerous national events such as the
various public shootings, school massacres,
and recently the Boston Marathon explosions,
a clever orchestrated production event.

Edward Snowden, who exposed the NSA, used to work for the CIA. He turned against
the Black Hats. The imaginative observers
might wonder if he migrated to the
NSA Black Hat camp in order to gain
access to the back doors for the benefit
of the CIA White Hat camp, before
launching an exposure campaign. This
episode is an integral part of the
internal war within the vast array
of USGovt security agencies, of which
over 15 exist. Defense Intelligence
is the oldest of such security agencies.
A battle is on between the dark side
of the CIA (with its narcotics business
and genocide programs) and the Pentagon
(with its devotion to the Constitution
and service to the People). The public
has been largely forgotten during
the blossomed Fascist Business Model
in the shadow of 911 events. The NSA
colluded with the dark side of the
CIA and the dark side of the USMilitary
(see NORAD) to organize and coordinate
the 911 incident. The ongoing question
in the Jackass mind is where so many
sociopaths and murders come from,
and whether they are born or made???

The Pentagon is the last vestige and hope for the nation
to be restored to integrity and order. General Petraeus was dismissed, not
for sexual dalliance, but for planning
a Coup d'Etat and military takeover
of the White House. The CIA benefits
from between $800 billion and $1.2
trillion in illicit profits per year,
tied to the Afghan War narcotics enterprise,
using Baghdad banks as clearing houses
and NATO airbases as distribution
locations and New York money center
banks as laundering sites. The Pentagon
wishes to restore the rule of law,
to imprison some in leadership positions,
and to rebuild the nation. One must
keep in mind that many good officers
work in the CIA, and wish to pursue
information, while taking strategic
action in order to ensure security
for the nation. The NSA through its
Wall Street cohorts exacts control
of the legislative and ministerial
offices by means of bribery, coercion,
violence, press stories, and smear
tactics. The Pentagon is planning
to take back control by a complex
sequence of events, starting with
revelations about the standard practices
that have been at work for over a
decade. Sooner or later, the nation
will realize that the internal battle
is for control of the nation, and
for rescuing the nation from the fierce
grip of a vast criminal organization
that includes the big banks, military
contractors, large pharmaceutical
firms, and news networks. The
people must prevail, but the challenge
is formidable and the earth's integrity
has become at stake.

◄$$$ SNOWDEN WAS NOT ALONE AND THAT IS TERRIFYING FOR THE CABAL. THE DE-CENTRALIZED
GROUP CALLED ANONYMOUS WITHIN THE
USMILITARY IS EXPANDING IN SIZE, SCOPE,
AND IMPORTANCE. THE LEAKED STORIES
ARE GROWING. $$$

The USMilitary has become in many a highly integrated distributed center using
technology. Meantime, the internet
itself serves as a medium of communication
that cannot be fully controlled. The
armed forces service men and women
are tech savvy, even on the battle
fields. Numerous are the non-commissioned
officers in the military. They have
been eagerly sharing information,
as they slowly conclude they are actually
selling their souls to the syndicate
as supply chains are secured for the
USEconomy and its own USMilitary.
This is especially true of those with
long service tenures. They realize
many secrets need to remain secrets,
but other secrets must come out since
they are basically kept in order to
protect criminal elements. The movement
Anonmyous has influence that extends
deep into the bowels of the military
industrial complex. See the Buzzfeed
article (CLICK HERE)
and the summary Zero Hedge article
(CLICK HERE).
Ultimately the natural reaction is
for the soul to seek goodness, which
is very hard for any centralized pathological
cabal to fight. The Wikileaks, the
Snowden Security Database leaks, and
the Anonymous leaks are extensions
of the people involved in coordated
counter-actions.

The Snowden files are the most awesome organized counter-movement in modern
US history. Actually, Snowden is part of a very
large organization, with him as the
visible object (for praise or scorn).
Anonymous has a message, that Snowden
is not alone, and the spirit of the
individual is still alive. It is very
difficult for a criminal organization
to defend against a de-centralized
resistance movement. It occurs as
multiple fronts in battle, each without
a central base. The press networks
are used to paint the movement as
treasonous. The distributed aspect
is seen also in USD trade, database
outlets, website hosting, portable
PCs, smart phones, and so forth. The
Powerz will attempt to discredit the
Snowden Files by false accounts and
absurd fantastic nutty stories that
are not from his sources.

◄$$$ THE RUSSIAN LEADERS WARN TO REMOVE MONEY FROM WESTERN BANKS BEFORE
THE CONFISCATIONS BEGIN. THEY WILL
BE THE LARGEST IN MODERN HISTORY,
A CLIMAX NAZI THEFT WITH FULL GOVERNMENT
BLESSING. FOREIGN SOURCES ISSUE MORE
COMPLETE WARNINGS THAN THE WESTERN
NATIONS. THE WARNINGS ARE WITHOUT
PRECEDENT IN THE MODERN ERA. $$$

The direct warning by Prime Minister Dmitri Medvedev is consistent with what
the Jackass forecasted precisely one
month ago. It appears as though the
Kremlin used Snowden to block off
the US leader crew from any influence
in the upcoming G-20 Meeting that
combines with the Intl Economic Summit.
The agenda is clear on both conferences,
establishment of non-USD trade alternative
under continued development. The Gold
Trade Settlement mechanisms and platforms
will proceed full tilt in development.
The USGovt delegation will not attend,
and if it does attend, expect low
level under-secretaries to appear
as observers.

Bill Holter makes many powerful comments which echo the Jackass sentiment on
the importance of the G-20 summit
due to take place in early September.
It will be held in St.
Petersburg Russia.
Holter believes it will be a significant
meeting where the world decides to
abandon the USDollar, or at least
set some large wheels in motion.
The United States has greatly angered the world, to
such a degree that the US
delegation was not invited. The US
Manchurian Candidate leader has refused
to meet with Vladimir Putin because
of the Snowden affair, giving Team
Obama the insecure high moral ground.
The mutual shun will isolate the United States even further, exactly as the Jackass
has preached for a couple years. The
US will be looking in from the outside while the
rest of the world votes on its fate,
making grand plans for various mechanisms
and platforms for trade to be conducted
outside the USDollar sphere. The consequence
to follow will be reserves management
no longer centered upon the USTreasury
Bond. A Paradigm Shift is underway,
the Russian summit to further it with
a grand push.

The speculation is that a new currency might be announced, one gold-backed.
To be sure, the odds are better than
80% (in Holter's view) that non-USDollar
settlement of crude oil and other
commodities will be discussed. The
billboards and subway walls are loaded
with messages, that the USDollar must
be averted in new mainstream channels,
emanating from the Eastern trade corridors.
As a keynote message in a diversionary
tactic, Prime Minister Medvedev issued
an alert to Russians all over the
world to remove their money from the
US and Western banks, in order to avoid account
confiscations during bank failuress.
The Cyprus model is to be used
for confiscations, with due warning
that is almost totally unheeded. Western
citizens seem oblivious to what is
happening. The Medvedev warning set
a tone of a criminal Western banking
system lacking integrity, with no
respect for private accounts and wealth.

The common thread of events is staggering, fully indicative of a sea change.
The G-20 summit is being held in Russia, which has joined China as leaders of the vast
Eastern sled teams. The second in
Russian command has warned its citizens
to stand aside during Western bank
collapse and account thefts like what
Cyprus
wrought. The Western Gold inventories
are being depleted in a bullion bank
run that is making history. The GOFO
(Gold Forward Rates) have been negative
almost 30 days running, citing negative
rates in future monthly contracts.
The early warning signals of a COMEX
gold market default are seen and heard
every day. Even the USDollar index
has softened and broken trendlines
and support levels again. See the
EU Times article (CLICK HERE)
and the CountDown article (CLICK HERE)
and the Money News article (CLICK
HERE).

◄$$$ TWO INTERVIEWS AT KING WORLD NEWS HIGHLIGHT THE CRISIS IN PROGRESS.
IT IS UNSTOPPABLE. THE INSTABILITY
IS EVERYWHERE. $$$

In the interview of John Embry: "We Have Never Seen Anything Like
This in History"
is a review of the highly unstable
financial markets (due to constant
interventions) and highly unstable
banking system (due to ever-present
derivative supports). The system cannot
stand on its own merit. He points
out that the mining costs for Gold
& Silver (higher than current
metal prices) will cause a rapid rebound
in their interfered metals prices.
See the King World News interview
(CLICK HERE).

In the interview of Michael Pento: "Expect Economic Chaos and Financial
Collapse" is a
review of the high risks inherent
due to the USEconomic recovery that
never arrives, but is always promised
(and expected in asset prices). He
sees no substance to supposed solutions,
only high debt burdens. The true solution
lies on the other side of a sharp
brief depression, after significant
debt reduction. But instead the nation
will be dosed with more debt and higher
price inflation. See the King World
News interview (CLICK HERE).

◄$$$ THE USGOVT HAS IMPOSED SOME HARSH PENALTIES RESULTING IN LIFTED PASSPORTS.
THE FASCIST STATE HAS EXTENDED ARMS. TAX DELINQUENCY
CONSEQUENCES ARE A DRIVING FORCE.
THE PRACTICE IS SPREADING TO SOME
STATES LIKE NEW YORK, WITH DRIVERS LICENSES. $$$

The USCongress wants the IRS to cancel American citizen passports if big tax
obligations are present on the books,
unpaid and overdue. Other ways to
cancel or refuse passport renewal
exist. Hidden within the 2013 highway
funding bill are a few paragraphs
on passport revocation. The bill is
titled "Moving Ahead for Progress
in the 21st Century Act."
But it seems to include a fascist
provision in Section 40304, which
would revoke a passport if a seriously
delinquent tax debt looms. If a tax
bill of over $50,000 is owed to the
IRS, the USGovt might soon be able
to revoke the passport. There
is no hearing and no opportunity to
contest this decision, the lack of
due process being much like in a totalitarian
state.

The present law permits the USGovt to prevent travel to foreign countries a)
if a federal court has issued a warrant
for your arrest, b) if a federal or
state court has ordered you not to
leave the United States, c) if another
country has requested your extradition,
d) if you owe more than $2500 in delinquent
child support payments, or e) if doubts
arise about the legitimacy of your
eligibility in US citizenship. Then
consider the obtrusive USDept
State new
Biographical Questionnaire being used
during routine passport renewals.
Questions of its legality are in constant
debate. They focus on religious ceremonies
surrounding the birth event to be
worthy of note. Absurd questions might
demand information about the mother's
medical appointments or hospital stay
details, even names of attending doctor
and nurses. Of course, 90% of duly
bred citizens could not provide such
information, nor could the USGovt
officials and their dutiful bureaucrats
who enforce such rules.

A new law proposed in 2011 would revoke both the US
passport and citizenship if "engaging
in, or purposefully or materially
supporting, hostilities [against the
United States]."
The interpretation is strictly within
the judgment of the officials, and
can thereby be used to protect criminal
activity by the officials themselves.
See the Nestmann article (CLICK HERE).
The State of New
York has followed in the same vein.
A serious tax delinquency can result
in a revoked drivers license. See
the News Day article (CLICK HERE).

◄$$$ THE ECONOMISTS DO NOT COMPREHEND WHY THE USECONOMY HAS ENTERED SYSTEMIC
FAILURE, FROM THE CHINESE INDUSTRIAL
PRESENCE. THE ECONOMISTS DO NOT COMPREHEND
WHY THE USFED MONETARY POLICY IS DESTRUCTIVE
AND GUARANTEES SYSTEMIC FAILURE IN
THE FINAL STEP, FROM RISING COST STRUCTURE.
THE UNITED STATES GAVE AWAY THE CORE
TO INDUSTRY AND LEGITIMATE INCOME.
AS A RESULT, THE ECONOMIC BUBBLE BROKE
WITH NO OPPORTUNITY TO RECOVER. THE NATURAL CONSEQUENCE TO OFFICIAL MONETARY
INFLATION IS RISING COSTS, LOWER PROFITABILITY,
AND DESTROYED CAPITAL. GAME OVER.
NO MORE ASSET BUBBLES TO DEPEND UPON,
SINCE THE USTREASURY BOND BUBBLE IS
THE FINAL DEATH BUBBLE, SOON TO BE
A CONFISCATION BLACK HOLE. $$$

The key on this cycle was granting China Most Favored Nation status in 1999.
With industrial buildup taking place
in Asia and not in the United
States, the entire
stimulus from the next asset bubble
bust would be neutered in effectiveness,
rendered null. Then came the systemic
failure. Exploiting cheaper Asian
labor for a full generation has resulted
in a build-up in wealth in the East,
and a dependence upon asset bubbles
in the West. The income lies in the
East, while the debt piles up in the
West. However, few economists
grasp the significance of why in the
2000 decade the bust was assured.
Many like my own older brother, who
has an Economics BS degree, have no
idea what is going on with the cycle.
He just says blithely and ignorantly,
"The US always pulls through
after the crisis. The monetary stimulus
will eventually kick in. The bankruptcy
process always works." My
disagreements have been the cause
of frequent discussions, good arguments,
and heated exchanges. My qualifications
are only of a Statistician with wide
reading experience. My response has
been steadily, "Not this time,
since the capital expenditure mechanism
has been disrupted by the Chinese
industry presence. Thus no traction
exists for new business creation.
At the same time, the bankruptcy process
has been totally averted, like with
the big US banks."
That has earned a response of "Huh?
I don't know about those things."
Amazingly, those trained in economics
do not know much about capital formation,
about business incentive, or its critical
importance. My three college courses
in Economics helped some, but reading
the Wall St Journal on 100-150 issues,
and reading Barrons on 50-70 issues,
helped with an informal education
for the Jackass. An eager mind can
find good material.

The big difference this time is that the US
corporations are not investing to
take advantage of the low interest
rate. The new capital investment
is taking place in Asia still, even
by many large US corporations. They do not
wish to deal with extremely high corporate
taxes, nor meddlesome federal regulations.
In 2005 and 2006 and 2007, the Jackass
concluded it is game over when the
housing market crashes. My brother
wondered why anyone could be so certain.
My response was simple, "Because
the entire USEconomy had been turned
dependent on the housing and mortgage
bubbles, with industry sent to China. It is GAME OVER, wherein events had only
to be played out." His response
was hoping not. My insult in final
reply was again rough but direct.
"Hope is for the the poorly informed,
the compromised masses, the unprepared,
the ignorant, and the clueless who
do not think much and waste their
opportunities to comprehend."
End of conversation.

My brother has talked with me about the aftermath in the following years, but
he cannot detect the ruinous state
of the USEconomy and its financial
structures. He is busy with his life,
his work, and his family. He calls
me arrogant and too self-assured in
forecasts, without taking the time
to listen to the skein of correct
mega-forecasts, and their justification
at the time. The Jackass has no family
and reads widely, converses with smart
people often, and analyzes endlessly.
We do not talk much anymore, not in
the last four years. We talk every
year like a ritual during Wimbledon and the USOpen Tennis in July and September. He is tired of
my insults. On my end, the fatigue
is with the cocky display of educated
ignorance, with not a single explanation
of how the nation arrived at the doorstep
of systemic failure. All that is heard
on the other end is denials, hope,
challenge, disrespect, and ignorance.
It has turned to painful ignorance,
whereas years ago it was more blissful
ignorance. Time to make a new family,
with ex-pats and latinos.

◄$$$ A BIG EVENT IS NEAR. IN NO WAY IS IT CERTAIN WHERE THE CLIMAX EVENTS
WILL BE TRIGGERED. ONLY THEORIES AND
SUSPICIONS CAN BE OFFERED. WATCH THE
BIG BANKS AND A GLOBAL USDOLLAR REJECTION.
MANY ARE THE PRELUDES TO THE REJECTION,
A SORT OF CONDITIONING. $$$

The Voice offered a brief unnerving warning in early August. He wrote, "Something
big is cooking. I know that there
are multiple pots on the stove, not
just one. The breakdown continues
with more systems suffering irreparable
damage each month. A big event is
near, which will capture the attention
of the world." My contact
EuroRaj pitched in. He wrote, "There
are way too many catalysts that can
cause the house to burn down. The
Powerz will pick a story they can
sell to the public, one that which
causes them the minimum pain. Other
than that, it very hard to be specific
as to what will go down in the manner
we are hoping and guessing. The list
is long for potential triggers."
My Jackass view is simple. The
trigger will come from either a big
bank failure or a site where the global
rejection of the USDollar is hosted.
Consider Deutsche Bank or a large
French bank, burdened by the extreme
weight and intense temperature of
derivatives on fire. Consider a location
where tens of $billions in USTBonds
are dumped on a single trading session,
and the USFed is caught off guard.
The failure of any one big Western
bank will cause a contagion failure
of several other big banks in Europe,
London, and New
York. Since the Lehman Brothers failure,
the big banks have tied themselves
together, lashed to withstand the
stormy seas with damaging smacks of
powerful waves of absent liquidity
against facades of insolvency. The
big dead banks are all connected with
FOREX swaps, Credit Default Swaps,
Interest Rate Swaps, and various commitments
to each other's survival.

The Eastern Hemisphere, largely led by China,
has been working avidly on a USDollar
alternative. Their progress is slow,
steady, broad, careful, and relentless.
The introduction of the Chinese Yuan
Swap Facility has become in recent
months a broad global device to step
away from the USDollar in trade settlement.
The weaning of the world off the USDollar
has been enabled by the Yuan Swap
between three large Chinese banks
and three large national banks from
an individual nation, and other nations.
The Yuan Swap Facility has encroached
into financial camps of Western European
nations, as well as Australia
and New Zealand, even Canada. The list of participating nations is as
long as a laundry list, and finally
includes the likes of England, France,
Switzerland,
and Germany (home site of the
Euro Central Bank). If the Saudis
announce acceptance for crude oil
payments outside the USDollar sphere,
a faster fuse will be lit. If the
BRICS nations make a quantum leap
of progress in Gold Trade Settlement,
a gigantic fuse will be lit. If the
Eurasian Trade Zone opens shop for
business in a grand gesture, over
half the world will see fuses lit.
If the USDollar is forced into
devaluation during a global currency
reset, a self-immolation fuse will
be lit. The list of dangers is
endless for the USDollar in sunset,
which will not go quietly into the
night.

◄$$$ LOST CONTROL IS THE MESSAGE FROM WEEK TO WEEK. SOME EXTREME EVENTS
LIE ON THE HORIZON. THEY WILL BROAD
IN SCOPE. THE ADJUSTMENT PROCESS WILL
BE VERY DISRUPTIVE. GIVEN THE HIGH
LEVEL OF CORRUPTION PRESENT AND FORCE
EXERTED, A MASSIVE SHOCK WAVES IS
COMING IN THE RESET, IN THE WHIPLASH.
$$$

In the Jackass view, it started with Black Monday 1987 under Greenspan. What
followed was a mass construction of
vaporous banking derivatives which
created a new foundation, but of paper
mache and not substance, and surely
not capital. It acts like a quickly
passed hot potato for a dinner never
served, a bite never offered. Following
the powerful Reagan Admin recession,
and a housing market recession, the
October 1987 stock market collapse
signaled an important watershed event.
The lost control accelerated with
the fall of the Soviet
Union and the collapse of the Soviet
Bloc. The equivalent of the Roaring
Twenties that preceded the Great Depression
occurred. The Roaring Nineties
in parallel caused a stirred cauldron
of abused debt and speculative ladles,
followed by a collapse in the tech
telecom bust at the turn of the millenium.
The lost control went visible in 2001
with 911, with fingerprints of the
fascist bankers in every conceivable
corner and crevice. The lost control
went critical in 2008 with the Lehman
Brothers failure and the adoption
of AIG and Fannie Mae. The lost
control has been visible all this
year 2013 with the COMEX Gold market
ambushes and raided gold vault inventories,
against a background of failing sovereign
bonds whose patches are bleeding profusely.
A big event is shaping up, with countless
signals.

The insurance giant AIG was taken under the USGovt aegis so that the wreckage
of the derivatives could be handled
with free money dispensed by the USFed,
inevitably with 0% interest policy
enacted. The mortage giant Fannie
Mae was taken under the USGovt aegis
so that the multi-$trillion fraudulent
center could be kept out of the spotlight,
since Papa Bush and Clinton had been
exposed for stealing $1.6 trillion.
The lost control went critical with
the 2009 installation of Zero Interest
Policy forever, and the 2011 Quantitative
Easing to Infinity. All during the
ZIRP & QE integrations, the Southern
European Bond market went bust, and
the USTreasury Bond market bubble
was born with glee. The lost control
hit the currency market in April and
June 2013 with the Gold ambushes,
using naked shorting as the weapon.
The lost control has turned visible
in a physical sense, since the COMEX
and GLD Fund have both suffered massive
reductions in their gold inventories.
It is game over, wealth evacuated.

EuroRaj pitched in with his interpretation of the next elements for lost control.

The Petro-Dollar will become history with the formation of the Natural
Gas Coop. It will eclipse OPEC and
bring about a newly formed alliance
centered around Gazprom of Russia.
The OPEC unity will give way with
the Saudi disarray in progress.

The USTreasury and USDollar will see the absolute control slowly splintered,
with internal and external support
structure in tatters. The internal
Interest Rate Swap will gradually
lose its power, due to pronounced
swings in the long-term bond yields.
The external forces will be felt
from foreign sales of USTBonds.
The new twist has already begun,
in the advent of a powerful Indirect
Exchange, whereby foreign nations
will send their USTBonds back to
New York and
London
for redemption, often through third
parties like after large scale acquisitions.

Prices will be determined by the return of Demand & Supply fundamental
factors, and not by derivatives
such as futures contracts, option
contracts, swap contracts, and brute
force of official interventions.
As a result, prices will rise for
essentials, and fall for luxuries.

Significant price inflation in the USEconomy is right around the corner.
It will send shock waves through
the nation and the entire Western
economies. The inflation will be
accompanied by supply shortages
in food, fuel, and cash. The adjustment
after two decades of price interference
will be acutely felt and very disruptive.

##
USTREASURYS FACE THE SHREDDER

◄$$$ THE MISFIT LAWRENCE SUMMERS WOULD BE FAVORABLE TO GOLD. THE
MONETARY HAWK (WITH NO FRIENDS IN
LOW PLACES OR HIGH PLACES) IS THE
ODDS-ON FAVORITE TO BECOME THE NEXT
USFED CHAIRMAN. WE GO FROM BAGHOLDER
BERNANKE TO ARROGANT ASS SUMMERS.
DURING THE PASS OF THE BATON, THE
USFED IS HARSHLY CRITICIZING THE EURO
CENTRAL BANK FOR NOT DOING ENOUGH.
THE USFED URGES MUCH MORE MONETARY
EXPANSION. $$$

The Lawrence Summers stakes have risen significantly to replace Ben Bernanke
as USFed Chairman. Thanks to some
strategic trial balloons floated over
Wall Street and WashingtonDC, the
setting is more clear. The Irish bookmaker
Paddy Power has taken the spotlight
as the unofficial odds maker venue
in the absence of InTrade. Money is
put on the line, like in Vegas. On
July 24th, the hawkish Larry Summers
was at a distant 20% probability in
his challenge against Janet Yellen,
who was a solid 75% favorite to become
the next Fed chair. In just two weeks,
Yellen's chances have crumbled to
just 33% currently. At the same time,
Summers has jumped significantly higher
with current chances seen as 67%.
See the Zero Hedge article (CLICK
HERE).
Pass the magic wand, the one that
creates wealth at zero cost. Although
competent, although having served
on the Fed Board for years, Yellin
is not a syndicate insider. At the
risk of sounding ethnically biased
(my friends know me as fair minded),
she does not come from the accepted
required breed, from the lineage of
Abraham, Moses, and David. The candidate
Summers carries the correct ethnic
breed, but he carries a weaker resume
than Yellin. Capability is not the
primary job requirement. Brethren
linkage is. Yellin would vomit in
public after the first Federal Open
Mouth event, after seeing first hand
the scummy innards of the USFed, its
operations, its correspondent banks,
its balance sheet, its historical
records, and its deep criminal activity.
Summers would take it all in stride,
as team player.

The top post will be given to Summer even though nobody in his recent past has
ever worked effectively with him,
due to insufferable arrogance. Summers
is an extremely unimpressive person,
which means that the USFed post is
being abandoned, to be filled by a
true Bagholder. No worthwhile candidate
will step forward. Timothy Geithner
had the Bagholder image firmly in
place, but he was likeable and played
well with his cohorts on the playground.
Summers does not. He will act like
a monetary hawk, attempt to rein in
debt, then make stunning shocking
reversals that make it clear even
to the biggest economic morons in
Summer School that inflation will
continue forever and a day. The wreckage
will open the flood gates for Gold
and assure a COMEX crash, a much desired
event.

The baton, or magic money wand, must be passed to the next wizard of liquidity,
at a time when conflict has arisen
and collapse seems assured. The USFed
has launchd a nasty blistering attack
on the European Central Bank. The
US central bank calls for Quantitative Easing
across the board to lift the EuroZone
out of its slump, including bundles
of small business loans. The US camp urges much greater monetary growth in
order to foster economic growth, unconcerned
about debt levels. Europe has always been wiser in debt management, for the last 50 years.
See the Business Insider article (CLICK
HERE).

◄$$$ FOREIGNERS SOLD MORE US$-BASED SECURITIES IN JUNE THAN AFTER THE
LEHMAN BANKRUPTCY. AN ACCELERATION
OF FOREIGN DUMPING IS IN PROGRESS.
THE USFED MUST LAP UP ALL THE DUMPS,
OR ELSE USTBOND YIELDS WILL FLY PAST
3% TO 4% QUICKLY. BIG PRESSURE IS
ON PRIMARY DEALERS, WHICH THE USFED
MUST RELIEVE. THE TAPER TALK WILL
REVERSE INTO AN ACCELERATION OF BOND
PURCHASES. A GLOBAL USDOLLAR REJECTION
IS IN FULL SWING. $$$

In June and July, the Jackass indicated that the USFed
would eventually be forced to buy
up all the foreign dumping of USTreasury
Bonds. It is happening. That includes the Indirect Exchange from foreign entities
which pay off asset purchases and
acquisitions, using USTBonds as currency
in settlement. The June data indicates
the USFed cannot taper their bond
monetization programs, and in fact,
they might have to amplify. The TIC
Report is compelling. The propaganda
notwithstanding, a massive wind has
come to New York blowing foreign held USTBonds in the window. Another correct
forecast. The USFed must buy what
the foreigners sell, or what they
dump en masse. The risk is near for
a move past 3.0% in the UST 10-year
Bond. Any quick move not addressed
immediately by the USFed and USDept
Treasury will mean a breakaway toward
the 4.0% level in a matter of several
weeks. The primary dealers are under
tremendous pressure to absorb the
foreign dumping, but the USFed must
take the bonds off the dealers hands
to prevent the dealers from suddenly
going insolvent, then closing offices.
If they suffer insolvency, they risk
going out of business and not serving
as USFed squires. In a word, the foreigners
are dumping with a vengeance, dumping
boatloads.

Paul Mylchreest added a great point regarding the tighter
capital requirements imposed by Basel III Rules. He said, "Leverage ratio
regulations might preclude banks using
REPO's to accommodate sudden influx
of Treasury [being dumped by foreigners.]
Maybe they will use the Exchange Stabilization
Fund if BRICS start swapping USTreasurys
for Gold as you suggest." So
the big US
banks, and London
banks too, might not be able to withstand
the huge flood of USTBonds returned
to the sender from foreign sources
due to stricter rules on stretched
capital.

The recently released Treasury Investment Capital (TIC) Report showed every
single type of US$-based securities
sold on a net basis, a rare occurrence.
Corporate stocks sold net $26.8 billion,
Corporate Bonds sold net $5.0 billion,
Mortgage Agencies sold net $5.2 billion,
and the big culprit Treasurys sold
an record setting net $40.8 billion.
That is the largest single month sale
of USTBonds in history. The consolidated
foreign sale in June 2013 was greater
than either month when Lehman failed,
September or October 2008. But
it is not in the financial news. Conclude
that the Bernanke Taper Tantrum (Tyler
Durden's clever term) was a more shocking
event than the biggest bankrtupcy
filing in history. Obviously the stage
was set by ZIRP & QE monetary
abuses. See the Zero Hedge article
(CLICK HERE).
The conclusion is simple and staring
the nation in the face. The
USFed must accelerate the QE bond
monetization program, not reduce it.
The public statements and declared
rationale will be interesting, if
not a comedy in lies. The bigger conclusion
is that the USGovt debt default is
within view, no longer over the horizon.

Some details are revealing on the USTBond dump in June. The TIC Report provides
details with nations in the rows and
months in the columns. Much can be
discerned. The big sellers were China at net minus $13.0 billion, Brazil at minus $12.2B, Switzerland at minus $12.4B, Singapore at minus $9.5B, and Canada at minus $8.4B, France at minus $6.1B, and India at minus $5.5B. Quickly,
if Canada
had the same US
population, their net sale would be
$84 billion. The same point for the
tiny island state of Singapore.
Conversely, and surprisingly Russia
was a net buyer with plus $8.6 billion,
perhaps to bring about a cheaper Ruble
currency from which to aid their export
trade. The Swiss might be converting
to Gold bullion in a mad scramble.
The Singapore bankers might be doing the same, but
under the motive of diversifcation
instead. The Brazilians might be addressing
powerful insolvency. The Competing
Currency War (with incentive to buy
USTBonds) will be put aside while
the grand parade to dump USTBonds
takes over in the next phase. See
the USDept Treasury website for the
TIC Report (CLICK HERE).

◄$$$ USFED CONTROLS KEY LEVERS, BUT NOT OTHERS. THE CONCEPT OF PUSHING
ON A STRING HAS NEVER BEEN MORE RELEVANT.
IT CANNOT RULE OVER INNOVATION OR
DICTATE WORK ETHICS. IT CANNOT FORCE
RISK-RIDDEN BUSINESS EXPANSION. ITS
MAIN ROLE HAS BEEN TO FOSTER ASSET
BUBBLES, AND CLEAN UP WHEN THEY GO
BUST. $$$

Charles Hugh Smith is a wise warrior with some insight. He points out what the
USFed does and does not control, in
assessing the danger level. Examine
what the USFed does control. It controls
the Fed Funds Rate, the lending rate
between banks. It can influence interest
rates in the real economy by buying
and selling USTreasury Bonds and other
securities, thus increasing or decreasing
liquidity within the banks through
altered money supply. It can make
funds available to the financial sector.
During the 2008 crisis crunch time,
the USFed made sweetheart loans over
$16 trillion to large global banks,
followed by another $9 trillion. So
it can give away money to the banker
elite for later purchase of the world.
Smith added some excellent wisdom,
concluding, "The USFed can
turn on the propaganda machines in
the press to talk of stimulus and
kickstarting the economy, when their
true effect is far more destructive
than productive."

The USFed cannot force any enterprise, a household, or individual to borrow
more money or to expand business segments.
It cannot differentiate between productive
investments and financial speculation,
or even malinvestments. It cannot
distribute money to households by
dropping cash from helicopters. Its
main function is to make money available
to banks. In many respects, its powers
in the real economy are severely limited,
with insignificant control or influence
over critical elements that make an
economy thrive and hum. Innovation,
patent development, technology advancements,
and work ethics matter in the real
economy. Forget the financial innovation
that shot massive holes in the Economic
Ship. That was as destructive as it
was deceptive. What truly matters
is the innovations in energy, agriculture,
transportation, media, medicine, along
with the work ethic and student development
in education. It cannot increase the
supply and availability of natural
resource abundance, or how efficiently
it is gathered.

Smith concluded, "The supposedly omnipotent Fed has virtually no
positive role in the key driver of
wealth creation. On the contrary,
the Fed's policies have had an actively
negative influence, as its monetary
manipulations have distorted the investment
landscape so drastically that capital
pours into unproductive speculative
bubbles rather than into productive
innovation."The big
indictment against the USFed is its
historical promotion of asset bubbles,
their rise and burst, with tremendous
damage. Note the sequence of asset
bubble generation since the 1990 decade,
when the US
industry has been notably absent in
significant critical mass. It is the
all important source of legitimate
income. In summary, the US central bank matters much
less than one might think. In fact,
it is a highly destructive force.
See the Financial Sense article by
Smith (CLICK HERE).
By the way, MATA is Spanish means
to kill, as in this example to kill
wealth.

◄$$$ A USTREASURY BOND BACKFIRE IS IN PROGRESS, AS LOST CONTROL IS SEEN
IN RISING BOND YIELDS (AND USTBILL
YIELDS). THE USGOVT DEFICIT WILL RISE
BY AT LEAST $100 BILLION JUST FROM
THE IMPACT OF THE LAST SEVERAL WEEKS.
$$$

The UST maturity distribution might be less than 5 years for two thirds of the
portfolio, and the rest 10 years or
more. Rough calculation would mean
two thirds rose by 50 basis points,
and one third by 100 bpts. The
aggregate yield rise comes to about
a 66 bpt rise in aggregate, which
on a $16 trillion debt load means
a $105 billion increase in borrowing
costs. It is difficult to accept
that without any hint of recovery,
with new ObamaCare tax, and with higher
commodity, energy, and food prices,
that any USEconomic upsurge is remotely
possible. The USGovt deficit will
be near $1.0 trillion again. Any reduction
in spending by the military industrial
complex might be offset by further
unemployment and higher debt service
costs. To be sure, the USFed will
ramp up its $85 billion in bond purchases
per month. So Bernanke will resign
before the mess explodes, just like
Greenspan departed before the mortgage
bond mess exploded. See the Bloomberg
USTreasury Yield Curve chart below,
which site can be retrieved for later
updates (CLICK HERE).

Expect the USFed to announce soon an increase in their
bond monetization, and come up with
a grand lie as to why. The central
bank will not admit the foreign dumping
of USTBonds, since that would indicate
displeasure for the USDollar itself. The foreign dumping plus Indirect
Exchange means the USFed must lap
it all up, or else bond yields will
rise quickly past the 3.0% mark. The
USDept Treasury has many devices in
its machine shop to put the brakes
on, as Rob Kirby indicates, with the
Exchange Stabilization Fund and the
IRS tax flow vehicle. But foreign
sales and the Interest Rate Swap breakdown
will cause major problems, and lift
the TNX past the 3.0% mark. The TNX
has already threatened the 2.8% mark
last week.

◄$$$ JIM ROGERS BELIEVES THE USTREASURY BOND BUBBLE COULD POP SOON. THE
JACKASS AGREES, AND BELIEVES THE BUBBLE
HAS ALREADY BEEN PRICKED BY THE TAPER
TALK FROM BERNANKE HIMSELF. ADD THE
DYNAMICS OF UNILATERAL MONETARY POLICY
DECISIONS, WHICH UNDERMINE THE FOREX
RESERVES IN FOREX BONDS, MOTIVATING
FOREIGN NATIONS TO DIVERSIFY. THE
GLOBAL PLAYERS SEEKING A SOLUTION
OR BASIC PROTECTION WILL CONVERT USTBONDS
TO GOLD BULLION. THE BIGGEST ASSET
BUBBLE IN HISTORY IS FATED TO BURST.
$$$

The USFed under Bernanke started the motivation process for FOREX reserve managers
to unwind the USTreasury Bonds in
their portfolios. Foreigners had already
been led to diversify out of US$-based
bonds of many stripes, like USAgency
Mortgage Bonds and Corporate Bonds.
The Chairman, who disproved his
own doctoral thesis (that liquidity
overcomes depression and insolvency)
induced foreigners to sell USTBonds
further, in response to a series of
QE bond purchase programs, otherwise
known as the acidic hyper monetary
inflation. The big US and London banks must reverse their carry trade in USTreasurys, since the
leverage is killing them, certain
to deliver the nasty convexity from
leveraged selling. As the non-USDollar
trade alternative comes online, and
the BRICS Bank begins the process
to convert USTBonds into Gold bullion
for the Gold Trade Central Bank vaults,
the outflow will turn into a torrent,
a veritable flood. Jim Rogers believes
a USTBond bubble could pop soon. Agreed
100%, or 90% depending upon definition
of soon. See the Before Its News video
(CLICK HERE).

◄$$$ USFED BOND MONETIZATION EXTENSION COULD COME SOON TO MUNICIPAL BONDS.
LATER COULD BE CORPORATE BONDS, STARTING
WITH FINANCIAL FIRMS LIKE THE SYSTEMICALLY
IMPORTANT ONES (WHICH ARE PERMITTED
GROTESQUE FRAUD). $$$

Recall that Lehman Brothers showed its death throes first in its book of mortgage
bonds and with its own corporate bonds.
The USFed is under great pressure
to continue to serve as the bond purchaser
of last resort. The bond world has
a flood of such toxic bonds outside
the USTreasurys and USAgencys. As
long as their balance sheet is wrecked
and loaded with toxic toilet paper,
they might decide to add some small
volume MUNI Bonds and some Corporate
Bonds from the financial firms. In
just the last three months, the USFed
balance sheet has fallen in value
by a staggering $300 billion, a byproduct
of their own reckless Taper Talk on
reduced QE bond purchases. They
revealed themselves as trapped in
the monetary corner, as the Jackass
has described for four years. My firm
belief is that the USFed has already
been buying the bonds from systemically
important financial institutions (SIFI).
For a good analysis of the QE monetary
policy and its brief history since
2010 at the US Federal Reserve, see
the Financial Sense article by Paul
Kasriel (CLICK HERE),
who has emerged as an independent
analyst apart from a past bank affiliation
with Northern Trust. He works for
Legacy Private Trust. The lessons
in his analysis are many, like the
current USFed policy does not stimulate
economic growth, and surely does not
promote credit expansion in depository
institutions (commercial banks). He
dispels some commonly held myths.

◄$$$ TRUE USGOVT DEBT IS $70 TRILLION, COUNTING OBLIGATIONS, USING SIMILAR
METHODS TO HOW CORPORATIONS DEAL WITH
ACCOUNTING. IN A USECONOMY MIRED IN
RECESSION, IF NOT A GRIP OF DEPRESSION,
NO
WAY OUT APPEARS FOR MANAGING THE DEBT
BURDEN. A USGOVT DEBT DEFAULT LIES
AHEAD IN THE FORM OF A FORCED RESTRUCTURE.
$$$

More accounting deceptions circle the USGovt wagons. The United
States has accumulated
over $70 trillion in unreported debt,
an amount nearly six times the declared
figure, according to a new study by
University
of California
at San Diego economics Professor James Hamilton. The higher amount includes
future obligations that corporations
would be forced to declare on their
balance sheets. The official support
for housing, loan guarantees, deposit
insurance, actions taken by the Federal
Reserve, and government trust funds,
lift the total final debt amount.
Since the crisis hit in 2008 (marked
by Lehman, Fannie Mae, and AIG), the
USGovt debt has gone through the roof,
increasing by an additional $7 trillion.
No recovery is within sight or even
attempted, since big bank liquidations
are forbidden. Even at the ultra-low
bond yields, the interest on the debt
costs around $220 billion annually
just in service. Any return to
semi-normal interest rates would send
the net interest expense on US federal debt higher than the entire defense
budget by year 2020.

The details since 2008 are horrifying and ugly. Unprecedented efforts on the
part of the leaders (steered by the
bankers with firm yoke) to rescue
the USEconomy from financial ruin
led to a grand rise in the debt burden.
A better description is enormous toxic
bond redemptions led to the grand
debt increase. The controversial
bond purchase program known as Quantitative
Easing, complete with diverse large
scale asset purchases, has resulted
in no tangible growth in the USEconomy,
but certain higher cost structure
from market reaction. According
to Hamilton, the net effect of emergency lending programs between 2006
and 2008 was to increase the net debt
level of the USGovt by over $1 trillion
dollars. The USFed has all the while
stacked up a $3 trillion balance sheet,
loaded with the most rancid putrid
of toxic bond assets. The hidden debt
obligations center on the cost of
Medicare and Social Security, which
ran at $27.6 trillion and $26.5 trillion
respectively. The infirmed and the
elderly are joined by students, adding
to the US debt burden. Government
loans for students also featured high
in the report, equaling $714 billion
at the end of 2012, which is seven
times higher than end 2007. Student
loans are the fastest line item for
debt growth. Factor in the poor prospect
of job generation from a failing USEconomy,
and many studen debts will surely
default.

Hamilton offered a stern warning in clear
terms. He concluded, "These
numbers are so huge, it is hard even
to discuss them in a coherent way.
The US population is aging, and an aging population
means fewer people paying in and more
people expecting benefits. This reality
is unambiguously going to be a key
constraint on the sustainability of
fiscal policy for the United States. One would think we should be saving
as a nation today as preparation for
retirement. If in fact we are not,
the current enormous on-balance-sheet
federal debt is all the more of a
concern." Demographics again
loom as ominous.

As dire and worrisome as Hamilton's report states the debt burden to be,
another prominent economist paints
a worse picture. The USGovt debt burden
is much greater. when factoring in
military costs. The Boston University
economics professor Laurence Kotlikoff,
once on the Reagan Admin Council of
Economic Advisers, arrives at a $211
trillion debt load, after netting
out tax receipts in a sliding environment.
Do some simple math, and the USGovt
debt of $16.8 trillion parses out
to $53,000 for each US citizen. Considering the growth rate of the
debt, a reasonable person cannot square
the aging population, and poorly educated
masses, with video game expertise
and nimble smartphone aptitude rather
than math & science & language
skills, against the harsh reality
of the modern economy with global
competition. See the RT News article
(CLICK HERE).

##
GLOBAL USDOLLAR DEFIANCE

◄$$$ THE WORLD PREPARES TO REJECT THE USDOLLAR. THE PREMIER POST HAS BEEN
SEVERELY ABUSED. MONITOR AND INTERFERENCE
BY THE USGOVT IS NO LONGER DESIRED
BY FOREIGN ENTITIES. THE EASTERN HEMISPHERE
HAS MERGED FORCES TO DEVELOP A USDOLLAR
ALTERNATIVE FOR TRADE. BASIC ALTERNATIVES
LIKE THE YUAN SWAP FACILITY WILL BE
FOLLOWED BY OTHER MORE INNOVATIVE
AND RADICAL SYSTEMS BASED ON GOLD
TRADE SETTLEMENT. THE USDOLLAR IS
BEING WIDELY RECOGNIZED AS BACKED
BY ITS MILITARY, WITH BANK FRAUD AS
ITS FOUNDATION. $$$

Because of USDollar dominance, if not abused hegemony, the majority of all global
denominated transactions pass through
New
York funnels to settle payments. In
a great many cases, the two parties
are not from the US
and the companies are not registered
in the US.
The transactions often have absolutely
nothing to do with the United States. In turn,
the tremendous global flow of transactions
is monitored by the New York State Dept of Financial Services, which was created in 2011. This
agency plays a special role in the
exposure of bank and company wrongdoers,
real or imagined. Around 4500 organizations,
with assets of $6.2 trillion, find
themselves under watchful eyes and
scrutiny by this agency. It is not
desired. The world did not bestow
such power to the fascist US
bankers. The power was simply exerted,
due to the basis of payment settlement
in the global reserve standard in
the USDollar. The world has grown
weary of the interference, the snatched
privilege, abused power, the prevalent
controls. The unlimited surveillance
and invasion of privacy have pushed
foreign entities into a strong reaction.

The non-US banks and companies possess powerful incentives to replace the USDollar
with the currencies of other countries
when making international payments,
especially the Yuan Swap Facility.
At the same time they are working
vigorously to create their own regional
systems of international payments.
On a greater scale, little reported
by the Western press or even the gold
community, the multitude of Eastern
nations have banded together to develop
new platforms for settlement of trade
in Gold, with Turkey as intermediary.
They include some complex bilateral
systems with some simple characteristics.
They include a new type of currency,
namely Gold Trade Notes. The world
will be hearing much more about Gold
Trade Settlement in the following
months, a frequently mentioned Paradigm
Shift concept by the Jackass. The
showdowns are planned and will go
off with friction to cause sparks
seen the world over. The next sparks
will be seen in Russia. Putin don't take crapp,
and China
is staging face-offs with the Americans
over hegemony. See the Zero Hedge
article (CLICK HERE).

The USDollar rejection will be the second biggest story of this generation.
The first will be the USGovt debt
default restructure, possibly conducted
behind a USMilitary escort. The reason
is simple. Before the USDollar was
backed by Gold. Now it is backed by
the USMilitary, a point made by the
Jackass since 2004 amidst considerable
criticism and mockery. Now it is obvious.

◄$$$ THE MONEY SUPPLY HAS GONE TOTALLY BALLISTIC COMPARED TO USECONOMIC
ACTIVITY. NO CHANCE OF EVER RETURNING
TO THE NORM. EITHER GROWTH ZOOMS OR
LIQUIDITY IS SEVERELY TIGHTENED, BUT
NEITHER IS A VIABLE OPTION. THEREFORE
THE MONETARY EXPANSION WILL CONTINUE
FROM DESPERATION UNTIL THE USDOLLAR
IS PUSHED ASIDE AND REJECTED BROADLY.
THE SYSTEM BREAKDOWN IS OCCURRING
FROM INSOLVENCY, FRAUD, ROT, AND DEFIANCE. THE GUARANTOR FACTOR OF SYSTEMIC FAILURE IS THE USFED POLICY
ITSELF. $$$

John Hussman does great work. His insights are steady and deep, often shared
in the Hat Trick Letter reports. His
summary is extremely astute, pinpointing
precise problem areas. He summarized,
"Frankly, I view the present
course of monetary policy as reckless,
not because it threatens inflation
(which I do not think it will for
several years), but because it
diverts scarce capital away from productive
investment and toward speculative
activities; because it fails to
act on any economic constraint that
is actually binding here, so has little
hope of providing the economic support
that it purports to offer; because
decades of historical evidence provide
no basis to expect a material wealth
effect from stock values to the economy;
because the policy lowers hurdle rates
and encourages borrowing for unproductive
purposes including stock buybacks
at record highs (and there is no evidence
that buybacks are a good indication
of value); because it punishes the
elderly on fixed incomes; because
it perpetuates a bubble & bust
cycle created by Fed intervention,
which is not the medicine but the
very poison itself; and because moving
to the left on the liquidity preference
curve will likely be as painful as
moving to the right has been pleasant."
See the Global Economic Analysis article
(CLICK HERE).

The message from the chart is compelling and highlights the impossible exit
for the USFed. Since 2009, the Jackass
has described the Bernanke Fed as
trapped in the monetary corner with
no exit options. Now it is obvious.
A tremendous amount of liquidity
has flooded the entire USEconomy and
its financial system. The ample flow
has not produced much of any response
in five years with any economic growth,
nor fixed the bank insolvency problems.
The USTreasury Bill yield is miniscule.
No stimulus has occurred, only toxic
bond redemption in bank rescues. The
tightening will not be permitted,
while the growth will never arrive.
Instead, systemic failure will creep
into the structures pervasively. The
USFed must either soak up a sea of
massive liquidity in the most severe
tightening in modern history, or else
a miracle of astounding growth must
occur for over a decade to save the
system. The risk of USGovt debt
default with restructure grows by
the month. As footnote, the only missing
factor from the Hussman indictment
list was the capital destruction from
the QE bond purchases. The rising
cost structure guarantees the failure
of the USEconomy itself. Businesses
are shutting down from lost profitability,
the biggest blind spot in the entire
arena. The ObamaCare insurance costs
add to the vanishing profit margins.
The USFed monetary policy assures
a systemic failure, which almost nobody
connects to the QE policy itself.
The policy is the cause, not the cure.
The Jackass is the heretic for saying
so.

◄$$$ CHINA JUST FIRED THE FIRST
SALVO TOWARDS A NEW GOLD STANDARD.
UNTIL RECENTLY, THE CHINESE GOVT HAD
BEEN WORKING QUIETLY BEHIND THE SCENES
WITH YUAN SWAP FACILITIES FOR TRADE,
WITH A BROADER CAPITAL ACCOUNT, WITH
SITES TO SELL CHINESE GOVT DEBT, AND
MORE. THEY ARE CALLING FOR A BRETTON
WOODS SYSTEM WITH A GOLD STANDARD
REINSTATED, IN DIRECT CHALLENGE TO
THE ANGLO BANKERS. CONCURRENTLY, CHINA IS WORKING TOWARD A GOLD-BACKED YUAN CURRENCY.
$$$

A shock not well enough heard around the world was the blunt comment from the
official Chinese Govt monetary offices.
Yao Yudong of the Peoples Bank
of China monetary policy committee
has called for a new Bretton Woods
system to strengthen the global financial
system, in order to ensure proper
global liquidity. It would quickly
address the solvency plague also.
He made the startling pronouncement
in the China Securities Journal. Now
that the Intl Monetary Fund is under
more Chinese control, Yao
called for more power to the IMF to
foster greater cooperation and supervision.
China is hedging its bets,
pursuing the bigger solution in a
more unilateral manner. China could opt to have its
own hard asset backed option for the
future route, namely a gold-backed
Yuan currency. The PBOC comments and
challenge are barbed, serving notice.
China
has done much in the accumulation
of Gold bullion in its reserves, holding
between 5x to 8x as much gold as admitted
officially. The IMF would have to
abandon their ruse of a solution in
the Special Drawing Rights, their
official basket currency which represents
nothing more than a continuation of
the past failed fiat paper currency
system. Given their heavy role at
the IMFund, phasing out SDR talk would
be easy. They even suggest the new
Bancor would be a relic. The writing
has been on the wall for China's push to end the USDollar reserve supremacy
for over two years. The world urgently
needs a new Gold Standard, in whatever
form through banks and FOREX or through
trade settlement in distributed manner.
No solution has been seriously pursued
since the 2008 crisis began. See the
Zero Hedge article (CLICK HERE).

As footnote, the only way a gold-backed Yuan currency would succeed is if it
is widely used, crushing the non-participants.
If not widely used, it would kill
the Chinese economy quickly from a
sudden rise in the Yuan exchange rate.
This is a key point, and the principal
reason why new currency systems with
integrity are difficult to hatch and
bring into usage. Without wide usage,
they would kill their designers.

◄$$$ KAREN HUDES DESCRIBED THE INNER ELEMENTS OF THE USDOLLAR STRATEGIC
BREAKDOWN, FROM HER PERSPECTIVE WITHIN
THE WORLD BANK. HIDDEN POWER CENTERS
ARE IN A PANIC, YET THE PUBLIC SEES
NONE OF THE SHIFT IN CLOUT, BRAWN,
CONTROL, OR AUTHORITY. GOLD HAS GONE
INTO HIDING, AND SOON WILL NOT BE
AVAILABLE AT ANY PRICE USING FIAT
PAPER MONEY. A NEW GOLD STANDARD IS
SOON TO EMERGE. THE NEW LORDS ARE
WORKING TO MAKE A SMOOTH TRANSITION,
BUT A COLLAPSE OF THE BANKING SYSTEM
SEEMS NOT TO BE AVOIDABLE. $$$

The unfolding exposure by World Bank counsel Karen Hudes of its deep corruption
has evolved into a focal point of
growing leverage against the cabal.
Better yet, a potential strategic
convergence with other powerful entities
concerning the so-called World Funds.
The intrepid Hudes has brought to
light evidence of financial corruption
at the bank, which never would have
happened without its lost power from
elite hands. Her past attempts to
alert World Bank leadership were met
with persecution and trumped-up charges
by the USDept Justice, which have
since been dismissed. She has revealed
that other whistle blowers are now
prepared to step forward to institute
reform at the World Bank, a former
field fortress overtaken by the elite
financial interests. Its actions and
behavior in the last two to three
decades have gone counter to it stated
purpose, the alleviation of global
poverty. Its work has been to maintain
US and UK banker control and to exploit wealth opportunities.

Karen Hudes is a brave woman, former World Bank economist and official insider.
She turned whistle blower a couple
months ago, making great waves that
have turned into a tsunami. As preface,
she offered "I argued that
the World Bank was needed to prevent
an economic armageddon as people lost
confidence in the paper currency issued
by the Fed. Before my hearing, I made
sure that the District of Columbia,
Virginia, and Maryland knew that countries
had been threatening to further decentralize
jobs in the World Bank's headquarters
in Washington because of the corrupt
business climate, and of the decision
of Brazil, Russia, India, China, and
South Africa to set up their own development
bank." She comprehends the
potential power and disruptive influence
of the BRICS Bank. She might not be
aware that it will serve as a processing
plant to convert USTBonds into Gold
bullion. Perhaps she is so informed.
Hudes believes all fiat paper currencies
are on the brink of collapse, along
with the platforms they move through.
She made numerous important points.
See the Project Camelot article (CLICK
HERE)
and the In5D article (CLICK HERE). On the other
side of the storm lies conditions
where Gold & Silver seek out their
true price, an order of magnitude
higher.

All fiat paper currency and their sovereign bonds are on the brink of complete
collapse, as world leaders are scrambling
to make the transition into a new
currency as fast and smoothly as
possible. Alternatives are being
constructed in the East.

The collusion for LIBOR is from the same tactic used to game the stock
markets, by putting syndicate heads
as directors of the exchanges. The
method is used in almost every market
and regulatory body with oversight.

US Federal Reserve controllers and World Bank controllers are in a panic,
since they are being exposed. Their
system only functions in secrecy.
Their balance sheet is a mountain
of toxic paper.

The banksters, who control money, are trying to start World War III, in
order to cover up their crimes and
to exploit outcomes of war again.
They wish for continued subservience
by the population through debt and
poverty.

The Vatican bankers run by Jesuits have been kicked
out of the power chain. They have
been in the top position for decades,
laying claim to the US income tax stream.
They are now scrambling, realizing
their lost power and control. The
same Jesuits own Bank of America,
which is the primary narcotics money
laundering bank in the United States.

For years, the corporations of each US State and WashingtonDC had been
dissolved, as all IRS revenue had
formerly been directed in channels
to the Vatican with a small amount going to the
Bank of England, while none went
towards United States Govt operations.

The USDept Treasury will once again start issuing USDollars instead of
the Federal Reserve. Some state
banks will spring up along with
asset based currencies which will
swiftly put an end to the current
fiat currency in the United States. She said, "The Fed's
days are really numbered. All of
this is going to going forward very
quickly. We are also going to have
to think about how are we going
to be retiring these banks. We have
to find ways to smooth the transition."

Whether or not the banking collapse happens in the near future remains
to be seen. The current system is
unsustainable. Its collapse is inevitable,
only a matter of time.

Soon the fiat paper currency will be worthless, not accepted even to purchase
Gold & Silver. Gold is being
hoarded. She said, "At a
certain point, you will not be able
to buy any gold at any price using
fiat currency."

In order to overcome the current financial system, Hudes recommends that
we need a currency that is back
by precious metals or some other
valuable commodity along with a
systematic way of retiring the current
fiat paper.

◄$$$ THE G-20 MEETING WILL BE JOINED BY THE INTERNATIONAL ECONOMIC SUMMIT
MEETING. EXPECT SIGNIFICANT PROGRESS
ON DECLARING FIRM PLANS FOR A USDOLLAR
ALTERNATIVE IN TRADE. LOOK FOR DETAILS
TO BE WORKED OUT ON CERTAIN KEY PLATFORMS
THAT SERVE THE GOAL OF GOLD TRADE
SETTLEMENT, WITH INTERMEDIARY. MOMENTUM
IS BUILDING FOR THE G-20, AS THE BRICS
NATIONS HELD A PRELIMINARY MEETING.
THEY INVITED 19 NATIONS FROM THE AFRICAN
UNION TO ATTEND.
THE USDOLLAR ALTERNATIVE MOVEMENT
IS GAINING HUGE MOMENTUM. $$$

Obama is scheduled not to go to Russia in September for the Group of 20 (G-20)
economic summit in St
Petersburg. He will not make a stop
in Moscow
for one-on-one talks with Putin. The
Russian President regards the US President as a rank amateur
on the global chessboard, a viewpoint
easy to agree with. The White House
demand for the return of Snowden from
Russian asylum has served as a bizarre
roadblock for the US
to participate in the phase-out of
the USDollar itself. In no way
did the Jackass expect the US
finance or political leadership to
attend the meetings in Russia, in any city in Russia, in any meetings at
all. The plan is to kick the corrupt
US
bankers and their London
handlers to the curb, to phase out
the USDollar in commercial trade settlement,
to diversify away from the USTreasury
Bond in banking reserves management.
See the Huffington Post article (CLICK
HERE).
The US and Russia are at odds in numerous
other arenas, such as the organization
of the Eurasian Trade Zone, the creation
of the Natural Gas Coop, the energy
pipelines construction, the war in
Syria (with its hidden gas pipeline
angle), the Iran sanctions, the crude
oil price interference, the USFed
monetary policy, and more.

Here is the agenda at both conference sites in Russia.
It has been unclear to what extent
the Intl Economic Summit would overlap
with the Group of 20 Meeting. By
the way, the G-20 Meeting has rendered
the G-7 Meeting as totally irrelevant
and obsolete, another Jackass forecast
call in 2011. On September 2nd
through 5th, the G-20 Finance Ministers
Deputies Meeting in Moscow,
under what they call the Finance Track.
On September 2nd through 5th, the
G-20 Sherpas Meeting and Joint meeting
with Finance Deputies in Moscow, under what they call the Sherpa track. On September 5th and
6th, the G-20 Leaders Summit
in St
Petersburg, under the Governmental
Track. Do not expect any gate crashing
by the Western leaders, who preside
over broken systems, insolvent banks,
and wrecked sovereign bonds. Moscow
is not Ankara
Turkey.
Watch for low ranking USDept Treasury
officials to attend in observation,
and not say a word, while not given
any respect, even ignored. As footnote,
a sherpa is a pack carrying man. Therefore,
expect the Sherpas Meeting to be where
the nuts & bolts of gold trade
settlement are discussed and developed.

In a bid to include greater participation of the African
Union, the BRICS
Business Council has invited business
leaders from 19 other African countries
to the launch meeting. Everything
is picking up speed into the G-20
Meeting in pursuit for a non-USDollar
alternative. The dark continent of Africa already has significant
ties with China in resource and mineral
pacts. Look for a grand merger among
the BRICS nations, the G-20 nations
(led by China),
the Shanghai Coop Org (mostly former
Soviet
Republics),
and the African Union. The entire
Eastern Hemisphere
is banding together to work out a
new trade settlement system and to
hammer out a new climax currency.
Look for an invitation to the Organization
of American States (the big piece
Latin America) in the near future,
which Brazil will lead. Brazil
is a key member of the BRICS. See
the BRICS Post article (CLICK HERE).

## JAPAN IN THE SPOTLIGHT

◄$$$ THE FUKUSHIMA NUCLEAR PLANT IN NORTHERN JAPAN IS POURING WATER LOADED
WITH HEAVY RADIATION OVER THE CONTAINMENT
RIM. THE DAM HAS BROKEN. THE ENTIRE PACIFIC OCEAN
IS AT RISK, FROM THE ASIAN FLOODGATE.
THE FOOD SYSTEM IS AT RISK, THE MOST
ACUTE IN FISH. THE WORLD INTEGRITY
IS AT ACUTE RISK. $$$

The USGovt reaction has been to keep the news quiet, and to increase 100-fold
the legal limits for food bearing
radiation at severely high contamination
levels. Apart from motive or deed
in the creation of the problem, the
world is at high risk from its environmental
integrity. The problem is far beyond
what the Japanese Govt can control
or solve. Due to pride and stubbornness,
the Japanese leaders do not seek help
from world experts. Observe the map
of radiation fanning out, from the
National Oceanographic and Atmospheric
Agency. In amazement, Australia is protected by flows. The only part
that does not make sense is that trade
currents flow northeast from Hawaii
(west of Mexico) toward British Columbia, which is not evident on the mapped currents. See
the Zero Hedge article (CLICK HERE).

◄$$$ JAPAN IS THE LAND OF SETTING SUN ON THE FINANCIAL HORIZON.
SOME INCREDIBLY UGLY FORCES ARE AT
WORK. THE NATION MIGHT BE A WEAKER
SPOT THAN SOUTHERN
EUROPE, SINCE UNDER AMERICAN HIDDEN
ATTACK. $$$

The amazingly obvious factor, visible on any financial stage, is that for over
two decades, the nation has been offering
Zero Interest Rate Policy with no
exit, no progress, no solution, and
no hope. The arrival of China
ten years ago has resulted in key
steps backward for the Japanese economy
and its debt structure. The annual
surplus is gone, long used to push
down the Yen currency safely. Now
the Yen is kept in a downward trajectory
with far more dangerous risk in consequence.
The decision to align with China against
the USDollar, using the Yuan Swap
Facility in the short term but a greater
alliance in a pan-Asian trade zone
in the bigger picture, has wrought
the vengeance played out in Fukushima.
Reliable reports indicate a nuclear
device was set off under the northern
part of Japan, followed days
later by direct strikes against the
string of nuclear reactors by HAARP
weapons. The finger is pointed at
the USGovt security agencies, as well
as the USMilitary. The scientists
of Asia have
noticed the accident did not bear
a natural earthquake signature, but
rather a detonation signature.
They are experienced in such basic
detections.

The result is chaos to Japan, high endless
reconstruction costs, an insurance
nightmare, widespread price inflation,
and higher electrical utility costs.
The criminal element is strongly rumored
to be ongoing. Numerous diverse and
independent reports indicate the USGovt
has employed for many years the Yakuzi,
the Japanese mafia, in order to maintain
control over the Bank of Japan, like
with regular death execution threats.
The US
banker syndicate offered to halt the
hidden geological weapon that shakes
the tectonic plates into a rumble
with its own local nuclear powerpack,
called HAARP. The cessation was
offered with a $800 billion payoff
to stop. The payment was reportedly
made by Japan
to the Syndicate, but the vile vicious
attacks apparently did not stop.
The nation is site of a highly probable
financial meltdown and systemic failure,
even while the Fukushima
waters pour over the containment walls
finally for an environmental failure.
The breakdown, apart from a radiated
Pacific Ocean,
will have a financial component and
an industrial component with an inflation
kicker.

The desperate moves to devalue the Yen currency have turned far worse than what
can be described as merely dangerous.
The latest rounds of what surely can
be labeled as QE to Infinity have
brought a backfire of rising price
inflation, rising costs to export
industries, and risk to Japanese
Govt Bonds. Their entire national
pension system depends upon these
bonds, whose decline has reduced pension
income. An acute risk for Asia
of systemic failure has risen in Japan. The trade with Japan, done increasingly by means of outsourced
production in China,
is settled in the Yuan Swap Facility,
fully embraced by Japan, and seen as an alliance against American
interests. A firm Asian handshake
is being made, more like a broad acceptance
of the next chapter no longer US$-centric.
Japan signed up for Gold Trade Settlement, noticeable
to those with opened eyes, not for
those who continue waving the US$-trade flag and
wear red white and blue jockey shorts.
The greatest Asian powers have met
and decided to take responsive action.
Think war of the worlds, the day time
stood still, or close encounters of
the worst kind. Some incredible events
are on track.

◄$$$ JAPANESE GOVT DEBT HIT ONE QUADRILLION YEN. THEIR CUMULATIVE DEBT
HAS SURPASSED THE COMBINED SIZE OF
THREE ECONOMIES IN GERMANY,
FRANCE, AND GREAT BRITAIN. NO REMOTE HINT OF SOLUTION FROM
23 YEARS OF ZERO BOUND RATES. $$$

Nobody in the West prefers to pay attention to the Japanese debt meltdown. The
nation of Japan has crossed into uncharted fiscal territory
with its national debt. It has reached
a milestone new high, one quadrillion
Yen. The public debt burden is
over 200% of its GDP, the size of
the economy, the world's third biggest.
Their cumulative debt is the worst
of any major industrial nation, yet
nobody seems to notice it has locked
in the ZIRP lever (straitjacket) without
solution. What makes it different
these years is that China
has been handed a large slice of the
manufacturing sector from Japanese
industries, taking away the famous
and critically important trade surplus.
The magnitude of the debt is clear.
The Japanese total debt volume is
larger than the economies of Germany,
France, and Britain combined. Only Saudi Arabia's debt
is worse. See the Business Week article
(CLICK HERE).

◄$$$ JAPAN DEVELOPMENTS ARE IN FLUX, STILL VASSALS
TO THE ANGLOS. THEY REACT TO THE RISE
OF CHINESE BLUE WATER NAVY. THE BATTLE
OF ASIAN WATERWAYS HAS HEATED UP.
THE JAPANESE ARE SETTING THE STAGE
FOR TIGHTER ALLIANCE WITH CHINA,
AND DISCARDING THE LONGSTANDING USMILITARY
& ECONOMIC ALLIANCE. JAPAN IS AT A STRATEGIC TURNING POINT. $$$

The lingering effects of World War II have never gone away for Japan.
A queer and questionable reform
program under the Abe Admin has injected
some costly temporary life into the
stagnant $5 trillion economy, owing
to a mindless initiative to drive
down the Yen currency. For several
months, the JapGovtBonds served as
a safe haven in the Asian region,
for nations not wishing to remain
bound to the USTreasury Bond paddock.
The Japanese military remains a bound
midget, constricted to the so-called
Self-Defense Forces agreement. The
US
wrote the Japanese pacifist constitution
that prohibits all offensive military
operations or exports of arms and
military equipment. The 1960 US-Japan
Security Treaty laid the foundation
of relations between Washington
and Tokyo.
The USGovt pledged to defend Japan
against any invaders. In return,
an empty pledge by Japan was given to help defend the US, but without any
dispatched military forces abroad.
Implicit is defense of the USDollar
and support of the USTBond. The
key to the treaty was the establishment
of permanent USMilitary air, land,
and sea bases in Japan. Half a century
later, they remain in place. Japan
thus became a giant aircraft carrier
from which the USMilitary dominates
the highly strategic North
Asia region. In exchange, Japanese
industry was given open access to
the US
market, thus laying the foundation
for Japan's economic expansion a generation ago. South
Korea enjoyed
a similar deal for access, with ambassadors
from Samsung, Hyundai, KIA and LG
riding the wave. The USEconomy has
many hidden military links.

The current decade with ripe crisis has challenged the longstanding arrangement,
due to the rapid rise of Chinese Military
and economic power. Last week, an
incident provoked a minor uproar in
Japan when a Chinese military aircraft flew over
waters near Okinawa,
the biggest airbase operated in the
nation by the USMilitary. Over the
past year, Chinese aircraft, warships,
and submarines have challenged Japanese
territorial waters around the SenkakuIslands in the East China Sea, the basis of disputed
ownership fanned frequently by the
USGovt in order to keep the two superpowers
at odds. The USGovt security agencies
organize public demonstratinos in
both countries, to fan the flames.
Some strange claim over Okinawa
ownership has cropped up, associated
with tribute paid to Imperial China
in the past. Such assertive claims,
alongside China's
rapid development of a true blue water
navy and long-range aircraft, are
deeply alarming to Japan.

With island access, China can project
its power into the Pacific, long the
province of the USMilitary overlords.
As the nationalist drums beat ever
louder in China, Japanese increasingly feel vulnerable.
The Japanese openly wonder if the
US
would risk a hot war with China
over a confrontation in Senkaku or
Ryukyu Islands.
The island chain stretches from Taiwan
to Japan.
Notice the obstruction for open water
access by the long chain of 500 miles
(800 km). Most of the islands are
small and of little significance,
hardly bearing much in minerals. They
form a seawall of some strategic importance.

Conversely, China perceives its rising naval and maritime power
as constricted by the Japanese archipelago
that acts as a giant barrier, blocking
China
from the open access to the enormous
Pacific, the largest ocean in the
world. Not left out, the old Soviet
Union faced a similar problem accessing
the North Pacific just two decades
ago. The battle over waterways has
ratcheted up. China maintains a
huge fleet of oil tankers, container
vessels, dry cargo freighters, and
cargo ships. Reaching the open waters
of the Pacific Ocean means running
the barrier of Japan's home islands,
the Senkaku and Ryukyus (Okinawa),
or going through the narrow Luzon Strait in the Philippines.
In a recent chess move, the United
States is negotiating
with Manila to
reopen the Subic Bay base that the USMilitary vacated in 1992. Commentary is replete
with interpreted power games and gestures.
China wants to muscle its way out of the East China Sea and into the open Pacific. Moreover, China is trying to demean and exert dominance over
Japan
for actions in World War II, when
atrocities were numerous. The proud
Japanese, by virtue of newfound Chinese
industrial strength, ironically aided
by the Japanese corporations, stand
to lose face over the naval and air
challenges.Asia
has begun to welcome the new big dog
on the block. It barks, it growls,
and it bites. It is China with a navy.

Eric Margolis concluded, "Japan is perfectly aware of this grave challenge,
but undecided on how to respond to
the biggest threat it has faced since
World War II. The choices seem to
be: hope the US
will block China's
expansion, or to abandon the US-imposed
strictures from the post-war period,
develop a real foreign policy, and
create credible military forces, including
nuclear arms. Doing so means casting
off Japan's eternal bowed head, apologetic attitudes,
and obedience to its former WWII enemies.
That would be a vast sea change in
Japan, where most people appear happy to accept
the status quo, or at least until
another big military scare from China." See
the Lew Rockwell article (CLICK HERE).
As footnote, the big unknown to a
changing formula in Japan could turn out to be the Yakuzi threats
to the Japanese Govt and even bankers.
They might be hired by the Chinese,
as the US
contractor in Langley Virginia is
pushed aside. The TRIAD has big money.

##
USECONOMY FIGHTS DEPRESSION

◄$$$ THE US-CONSUMER IS TAPPED OUT, AND THE MIDDLE CLASS IS NEARLY BROKE.
THE OBAMACARE TAX IS HAVING AN IMPACT
ON DISPOSABLE INCOME. THE KEY SIGNAL
FLARE IS WAL-MART, WHOSE BUSINESS
IS SAGGING BADLY. $$$

Wal-Mart issued weak earnings and lower sales, but the company remains an efficient
operator, according to Howard Davidowitz,
the outspoken retail consultant. It
is suffering from a weak economy.
He said, "Wal-Mart is a terrific
operator. They did not suddenly become
stupid. The USEconomy is in a state
of collapse. That is what is going
on." He went on to explain
that the labor market is generating
new jobs, but 75% are part-time with
low wages. The 2% payroll tax increase
for ObamaCare continues to impact
the US household customers.
Essentially, the lower middle class
is broke. The company stated some
challenges from currency fluctuations
in their supply chain. See the Zero
Hedge article (CLICK HERE).

◄$$$ THE CASS FREIGHT INDEX SHOWS THE USECONOMY SLOWING DOWN RAPIDLY.
THE DATA IS UNDENIABLE, NOT EASILY
GIMMICKED. $$$

Freight volumes are down significantly. The Cass Freight Index has been a trusted
measure of North American freight
volumes and expenditures since 1990.
Data within the Index includes all
domestic freight modes, derived from
$22 billion in freight transactions
processed by Cass annually on behalf
of its client base of hundreds of
large shippers. These companies represent
a broad sampling of industries including
consumer packaged goods, food, automotive,
chemical, OEM, retail, and heavy equipment.
The diversity of shippers and aggregate
volume provide a statistically valid
representation of North American shipping
activity. The data for 2013 is lower
than in 2012 and 2011 and 2010, and
is falling again. See the Cass Info
website (CLICK HERE).

◄$$$ BUREAU OF LABOR STATISTICS GRADUALLY BEING EXPOSED AS GRAND LIAR
AND FACTORY OF LIES. THE DIVERGENCE
WITH THE JOLTS DATABASE SIGNALS ANOTHER
MAJOR EVENT, SINCE THE EXTREME IS
AS GREAT AS RIGHT BEFORE THE LEHMAN
FAILURE. A MAJOR WARNING! $$$

The Bureau of Labor Statistics is a grotesque tool office. They gimmick labor
data, then revise downward heavily
every March. The widely watched Non-Farm
Payroll report has a gross discrepancy
with the (one month-delayed) JOLTS
survey. The difference is 40% below
the trendline of cumulative job additions
implied by the Non-Farm Payroll. The
difference is stark and noticeable,
and amounts to just shy of 60,000
jobs per month on average for 2013
alone. If not the Household survey,
the JOLTS survey exposes the Non-Farm
Payroll as a farce, a tool, a deceptive
monthly story. The past seven months
have seen a dramatic imbalance in
data benefitting the Reich Finance
artisans. The two series are diverging.
See the Zero Hedge article (CLICK
HERE).
Even the former head of the BLS stat
fabrication team admits the ruse.
The New York Post article (CLICK HERE).

Conclude the following.

In April, according to JOLTS, there were 108k job additions. According
to the NFP data, the job gain was
199k, equal to 84% more than per
JOLTS.

In May, according to JOLTS, there were 109k jobs additions. According to
the NFP data, the job gain was 176k,
equal to 62% more than per JOLTS.

In June, according to JOLTS, there were 120k jobs additions. According
to the NFP data, the job gain was
188k, equal to 57% more than per
JOLTS.

Adding across for all of 2013 (through the end of June data), JOLTS would
show that only 837k jobs were added
(or 140k per monthly average). Compare
this to the 1185K new jobs according
to the Establishment Survey (198k
per monthly average).

◄$$$ MORTGAGE CLOSING COSTS ARE UP 6% THIS YEAR. THE RISE OFFSETS ANY
BENEFIT FROM A LOWER MORTGAGE LOAN
RATE. BESIDES, THE RATES ARE RISING,
THANKS TO THE TAPER STOOL TALK. $$$

Homebuyers have benefited from record low mortgage rates over the past year,
but they have paid up bigtime to close
the deals. Closing costs averaged
$2402 over the past year nationwide
across the United
States, up 6%
from $2264 in 2012, according to a
survey by Bankrate.com. The estimates
were based on a $200,000 mortgage
for buyers with good credit using
a 20% down payment. Origination (underwriter)
fees rose 8% to $1730. Meanwhile,
third-party fees such as appraisal
costs and credit checks ticked up
1% to an average of $672. Within the
same survey, Hawaii
was identified as having the highest
closing costs in the country, at an
average of $2919, followed second
by Alaska at
$2675, then by South
Carolina at $2658, and by California
at $2639. Buyers in Wisconsin
paid the least, at an average of $2119,
followed by Missouri
at $2118 and by Kansas
at $2193. See the Yahoo Finance article
(CLICK HERE).

◄$$$ OHIO REJOINDER ON BANK OWNED HOMES WITH DEEP DAMAGE FROM VANDALISM
AND THEFTS. MIAMI
AND FLORIDA
ARE NOT ALONE IN THE RISKS TO PRIVATE
EQUITY FIRMS GRABBING BANK OWNED PROPERTIES
IN TRANCHES LIKE CARPET BAGGERS. WHERE
THERE IS URBAN DECAY, THERE WILL BE
RISK TO AGGREGATE INVESTMENT SCHEMES.
$$$

Regarding REO properties bought en masse by the private equity funds and others,
the story broadens. The risks are
very much engrained, but seemingly
ignored or minimized by the fund managers.
Thanks to the subscriber in Ohio,
whose identity has slipped through
my fingers. He provided a personal
account. "Having been a landlord
with scores of properties in Northeast
Ohio for over 30 years, I absolutely
agree with the assessment from the
guy from Miami-Dade. The hedge
fund and mass buyers of repossessed
homes have no idea what they are getting
into. They think they can buy
on the cheap and garner some cash
flow. If they hire managers, they
will find that managers will throw
tons of money into fixing the various
damage during turnover problems. But
this will solve nothing. What these
professional managers will do is GO
BY THE BOOK with reference to the
various problems, and will have very
little to show for the expenses besides
negative cash flow. Going by the
book will not work in today's residential
rental world. Tenants know they can
abuse professional management companies,
and will play the non-payment rent
games, forcing the managers into filing
for eviction. This is about a two-month
process in most areas. Meanwhile,
trash and damages accumulate while
no rent is being paid. Furthermore,
the aluminum siding (on older properties)
and copper plumbing, doors, fixtures,
even kitchen sinks will disappear.
Then, once the tenants vacate,
without additional repairs done, there
is no way to rent the place to the
next deadbeats.

Tenants
are tenants (as opposed to owners)
for a reason, usually very unfavorable
to the landlord. There are some exceptions.
Heck, some landlords will give a positive
recommendation to a proposed new landlord,
just to get rid of the deadbeats.
I have done it myself! The best
way to get rid of the bad renter is
to pay him to leave. I have used
this technique many times, and it
actually saves a lot of money, as
well as reduces damages. But these
hedge funds do not have a clue. I
could go on and on, but you get the
point. Bravo to you the Jackass for
bringing this issue up. Beware of
residential REIT funds also. Commercial
is an entirely different game, with
each property (even in the most depressed
areas) standing on its own merits
and cash flow possibilities." In 1983, the Jackass gave one month free rent to a good but sloppy tenant during
a rental home sale. It succeeded in
winning tenant cooperation. The sale
was done, profit gathered, and we
moved on.